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How to Register a Business

Guide on Registering  a Business in the UK

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When the government introduced the Companies Act 2008, it brought with it a raft of changes to corporate law. These reforms included allowing companies to be formed online and simplifying how companies were set up. As such, many businesses now use an online registration service for their company formation.

If you are considering setting up your own business in the UK but don't know where to start, starting the registration process should be your first step. It can help protect your intellectual property rights and give you access to financial services, such as loans and insurance cover, which are otherwise unavailable to unlicensed or unrecognised businesses. It also makes it easier for customers and suppliers to find you when they need something done.

Here’s a detailed guide on how to register your business in the UK that will simplify your journey.

Table of contents

Why Should I Register My Business in the UK?

The UK has a stable business environment. The country has strong links with the rest of the world, which makes it a popular destination for both domestic and foreign investors.

First things first, businesses need to register with HMRC to be considered legitimate, which means that if you are selling goods and services, you have to have a business registration number to run your operations.

You can register your business in the UK by filling out a simple online form. Once approved, you will receive a unique business number that can be used for all of your dealings with HMRC (Her Majesty’s Revenue and Customs).

Besides, there are some other reasons why you should consider registering your business in the UK, such as:

To enjoy the benefits of starting your venture: Many people choose to start their businesses because they want to set their hours and work around their schedule. However, you can only run a licensed business if you have an official government-issued registration number. By registering your business, you will be able to operate legally and avoid penalties from HMRC for potentially illegal practices, such as tax evasion or selling fake goods online.
To avoid the risk of fines: You should ensure that you register your business within three months of its starting up. This allows the HMRC to check if they need to investigate your company further before they start levying penalties on you and/or taking legal action against the company owner(s).
To protect your business against fraud: In the event of a scam or fraudulent activity, the law can only protect you and support you in your quest for justice if your company is recognised as being legally valid by the government.

Types of Business

Before you register a company, you need to determine which type of business it will be. Each type of business has its advantages and disadvantages, but they all have certain legal requirements that they must adhere to. Let’s take a look at the three types of businesses that the government allows you to register as.

Sole Trader

A sole trader is someone who runs their own business. This means that the person owns all of the assets and liabilities of their business, including the right to decide how the business will be run. The main benefit of running a sole trader is that you can set your hours and keep control of what happens in your business.

Although businesses run by sole traders need to be registered just as other types of businesses, they may operate outside of the normal regulatory framework due to their limitation of resources.

You are eligible to register a business as a sole trader if your earnings from self-employment exceed £1,000 by the end of the financial year. If you fit the bill, here’s what you need to do to list your business as a sole trader:

Keep a record of your accounts.
Invest in good insurance.
Pay taxes on your profits.
Register for VAT if your turnover is more than £85,000.
Assemble the paperwork before registering a business.

Partnership

A partnership is an agreement between two or more people to share profits, losses and other rights in a business venture. Partnerships are formed by a written contract, usually called a partnership agreement or partnership deed, which sets out how profits and losses will be shared between owners during the term of the agreement.

If you want to register a Limited Liability Partnership in the UK, you will need to register it with the HMRC. Once registered, partnerships are legally binding agreements between partners that allow them to protect all the parties involved by law.

Here’s how to register your business as a partnership:

Ensure that you fulfil the minimum requirement of having at least two people in the partnership.
Brainstorm a name for your business and ensure that it is unique. You can carry out a Google search or use the Companies House directory to make sure that your prospective company name hasn’t already been taken. As a general rule of thumb, consider choosing a name that hasn’t been used by any other business in the world. This will help you have a global appeal should you expand to other parts of the world. Also, ensure that your name doesn’t violate the guidelines and is free of offensive words.
Determine who will be the ‘nominated partner,’ who will be responsible for filing your company’s tax returns while the other partner will be responsible to send their tax returns to the government.
Register for VAT if the annual turnover exceeds £85,000.

Limited Company

A limited company is a company with limited liability, meaning it is independent of your personal assets. And it has to be registered with the Companies House to be legally recognised as such.

A limited company also offers limited liability to its shareholders, which means in case there is a financial crisis, neither the owners nor the shareholders are responsible to pay off the debts or liabilities.

Another benefit of registering a business as a limited company is that you are only liable to pay off a debt that is equivalent to your initial investment. So, let’s say you invested £10,000 when starting your limited company. As your company grew, you garnered £30,000 in liabilities and debt. Now, in the event of a financial failure, your limited company would be liable to pay only £10,000 because that’s how much you started with. It won’t matter if you have personal assets worth enough to pay off the company’s debt, making the business an independent entity.

Once recognised as a legal entity by the Companies House, a limited company can trade, buy or sell assets, borrow money, take on other people’s debts, make distributions to its members, pay dividends and offer company shares to interested buyers.

To register your business as a limited company, you must:

Choose the type of limited company you want to be recognised as.
Select a unique business name that doesn’t violate copyright or offend anybody.
Have your documents to-go before submission. You can either do it yourself or work with a company formation agent or an accountant, both of whom have the relevant experience and expertise in how to register a new business.
Once you receive your company registration number and the Certificate of Incorporation, you can register for VAT if your turnover crosses £85,000 for the financial year.

How Do You Register a New Business With HMRC?

The first step to registering a business in the UK is to start with the government site. This will allow you to set up bank accounts, directorships and company status.

You need to register your company as soon as possible after setting up your business (ideally within the first 3 months of starting operations) to avoid tax penalties, pay national insurance contributions, and file accounts with HMRC.

You will be required to fill in an online form on the UK government website, which will take about an hour to complete. But before you proceed, make sure you read up on the terms and conditions as well as the eligibility criteria that apply to you.

Once you have set up an account, it is time to fill out the necessary paperwork. You will need to provide the following information about your business to complete the registration process:

The name of your business.
Your address (where it will be based).
Your contact details – including email address and telephone number.
Your legal structure – this may include whether your company is a sole trader, limited company or partnership.
Your team, including the information on the directors, secretaries and shareholders.

Once you complete the registration process, you will receive a UTR (Unique Taxpayer Reference) via post, which will not only legitimise your business but can also be used to protect your company by law.

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Small Business With HMRC

Small businesses are required to register for VAT and pay the correct amount of tax to HMRC. For that, you need to complete the registration process within three months of setting up your business or you could be fined. The penalty starts at £100 and may exceed up to £1,600 depending on how long it takes for you to pay it off.

Tip

And if you are wondering how to register a small business, know that the registration process for small businesses is the same as it is for other types of companies.

Registering a Business at Companies House

Companies House is the UK’s official registrar of companies. It acts as a central repository for all information about companies, including their names and addresses, directors’ details and financial information.

Registering a business is a process that can vary depending on the type of business you are starting. You will need to decide how you want to be identified, as well as whether you want to be taxed and if so, how. The application process is quite flexible, so you will be able to register your company effortlessly if you have a basic understanding of how it works.

To start with, you will need to choose a unique name that doesn’t violate copyright or is offensive. It is a good idea to check what names are available before choosing one as there are strict rules in place regarding names that can be registered.

Once you have chosen your name, get your paperwork in order. This includes the Memorandum of Association (MoA), Articles of Association (AoA), and Form IN01. You will also be required to submit other documents, including:

A signed original statement from both parties that states that they are entering into a contract;
Proof of address for all parties;
A copy of each party's last known address;
A copy of each party's full legal name;
Your SIC (Standard Industrial Classification) code.

Once your documents are approved, the Companies House will provide you with the Certificate of Incorporation, which will instantly legalise your business in the UK.

Get Your Business Started With Osome

Tip

There is a lot of information and advice out there on how to register a business in the UK. But the entire process is easier said than done. So, if you are overwhelmed with the thought of registering your business, consider partnering with professionals.

Osome is a company formation and business bank account opening platform that helps you set up your company, register it and prepare its financial foundation right from scratch. We will guide you through every step of the way so that you know exactly what to do to become a legal company in the UK.

We are an online service that offers business services to individuals and small businesses who want to start their ventures. From a free name checking tool to VAT registration, our solutions are end-to-end, so you don’t have to stress or look elsewhere for support when registering your business.

The best part? Our service is completely online, so there is no need to worry about paperwork or filling out forms. It is paperless throughout! With our expertise, we can help you get your documents in order and start getting paid in no time.