The complete guide to registering a business in the UK

So, you’ve got your business idea and you’re ready to get moving. You need to tell the government first. We know, it sounds like an ordeal, but thankfully it won’t take long. Here’s everything you need to know about registering a business in the UK.

A checklist of what you need to do

• Choose your business structure
• Decide on a company name (this isn’t compulsory if you’re a sole trader)
• Get your relevant documentation together
• Appoint your designated members as well as directors and shareholders (if appropriate)
• Register with HMRC and/or Companies House via gov.uk or by post

Choosing a business structure

Ideally, you’d establish your business structure before you register with Companies House. However, there are instances where each of the company partners has to register separately, as you’ll see below. Ensure that your structure is in-line with what you want from your business.

Sole trader: As a sole trader, your business is your own. This means that the control of the business rests solely on you. Remember that the proverbial buck ends with you as well: debts and legal issues are yours to deal with, leaving your personal assets vulnerable. It’s a mighty workload, but you get to keep your profits. Quick note if you didn’t know already: you must register for Self Assessment and if your turnover is over £90,000, register for VAT.

Limited company: In short, limited companies are run by directors and owned by shareholders. The company itself acts as a legal entity and it has legally responsibility for contract or law breaches, rather than the responsibility falling to individuals. A limited company pays corporation tax on income and other taxable gains, and it must regularly report certain accounts. This information will be publicly available.

Partnerships: A partnership is made up of at least two business owners, sharing responsibility between them. The perk of this business structure is that partners can focus on their respective strengths. If one of you is an accountant, then they can deal with the finances. Profits are split between partners in pre-agreed percentages. Taxes will be paid at different rates by partners depending on their profits. Each partner has unlimited liability for debts.

Again, you must be registered with HMRC and VAT if your turnover is over £90,000 a year.

Limited liability partnerships (LLPs): As you might expect, an LLP is a hybrid of the limited company and partnership structures. The first thing you need to know is that you disclose finances to the public and report accounts to Companies House. Each person needs to register as self-employed with HMRC separately, and submit individual tax returns. Tax is paid by each partner and profits can’t be retained untaxed by the LLP. Like the partnership, there must be at least two members.

Choose your company name

Choosing a company name is central to your business’ brand identity. Though you can change it later on, it’s better to nail it on the first bash. Go through search engines, the Companies House company name availability checker and the Intellectual Property Office register to get some inspiration and to see that you won’t be nabbing someone else’s name.

A few top tips:

• Make sure your proposed business name isn’t offensive, uses insensitive wording or suggests that it’s connected to the government or the Royal Family (think ‘royal’, Windsor’, ‘British’, ‘Institution’ or ‘tribunal’)
• Punctuation marks are best avoided as they’re more limiting
• It can’t be more than 160 characters long, including spaces
• It goes without saying, but your business name should be consistent with your supplied documentation

Once the name has been approved, Companies House will give you a certificate and add you to a publicly available list of businesses.

Should I register as a sole trader or limited company?

Now that you know more than you did when you starting reading this article, you’re starting to look ahead. Take some time to ask yourself what would be best in terms of tax obligations and who will be running your company. Many small businesses start off as a sole trader, then move on to become a limited company as the business grows. And don’t worry, the decision is reversible, as shown in our article on Can I switch a limited company to sole trader?

For an at-a-glance view, we’ve summarised some of the pros and cons below.

When do I register?

• Sole traders must register when they earn more than £1,000 from their self-employment
• As you know, partnerships and limited companies need to register before they start operations
• If you fall out-with these groups, honestly, it’s still better to register as soon as you can

While we’re here, you need to register for corporation tax within three months of doing business.

How to register as a sole trader

Tell HMRC that you’re going to pay through Self Assessment. Keep a note of your sales and expenses and file quarterly through Making Tax Digital. Register by October 5 in your business’ second tax year to avoid penalties.

See also: Making Tax Digital (MTD) – HRMC requirements and the best compatible software providers

For a sole trader, you need a national insurance number, a UK address, contact detail and a business start date alongside your business activities.

How to register as a limited company

Register with Companies House as well as HMRC.

You must provide a registered office address, appoint at least one director and an optional company secretary. Select a Standard Industrial Classification (SIC) code to identify what your company does. Create memorandum and articles of association documents – these will explain how you run your company. Pay the registration fee before you complete your application with Companies House.

You must file your first set of accounts within 21 months of your incorporation date.

How to register as a partnership

As we’ve established, you need to register with HMRC and you must register by October 5 in the business’ second tax year or you could face a penalty. Register online or by using form SA400 if you are unable to register online.

You must have at least one nominated partner.  The nominated partner will manage the business’ tax returns as well as the business records. All partners must send their own individual tax returns. Register as a partner by using form SA401.

How to register as a limited liability partnership

To register as an LLP, you must have a registered office and email address in the same part of the country you’re registered in, i.e. England, Wales, Scotland, Northern Ireland. You can use your home address but be aware that it’ll be on display in the Companies House public register.

Register an LLP by yourself, through a formation agent, or through third-party software.

Appoint at least two ‘designated members’ at all times. Designated members must register with HMRC for Self Assessment and as an individual, acting for the LLP when the business is operating.

Will I need anything else?

Depending on your business structure, you might need  employment contracts, a shareholders’ agreement, a partnership agreement and a business plan.

How much does registering a company cost?

Doing a registration online costs £100 and you’ll be registered within 24 hours. You can be registered on the same day if you do it before 3pm and pay £156 on top of the £100 fee. Registering by post will cost you £124 and your business will be registered in 8-10 days.