How To Register a Business in the UK: A Comprehensive Guide for Entrepreneurs

The UK has a stable business environment. The country has strong links with the rest of the world, making it a popular destination for domestic and foreign investors and those looking to register a business.

You can register a business in the UK, which is straightforward and often done through a simple online form. For most limited companies, you can register for Corporation Tax simultaneously when registering with Companies House, simplifying the process. Once approved, you will receive a Unique Tax Reference (UTR) number from HMRC that will be used for all your tax-related matters... If you're interested in registering a limited company as a separate legal entity, our services can guide you through the process smoothly.

Besides, there are some other reasons why you should register a business in the UK, such as:

• To legally establish your business: Many people start businesses to enjoy flexibility and control over their schedules. While specific licenses are required for certain industries, registering your business with the government ensures you are operating legally and helps you avoid penalties from HMRC for tax non-compliance or other violations.
• To avoid the risk of fines: It is crucial to register your business with the relevant authorities within the required time frame- such as registering with HMRC for tax purposes- to avoid fines and legal actions. This process allows HMRC to assess your business’s tax obligation and compliance.
• To protect your business against fraud: Registering your business gives it legal recognition, which can be crucial if you need to protect your business against fraud or take legal action in case of disputes.
• To access government incentives and support: Registered businesses may sometimes be eligible for various government grants and support programs that are not available for unregistered entities. These incentives can provide valuable financial support and resources to help your business grow.

Ultimately, registering your business provides a solid foundation for growth and success.

Before you register your business, it is essential to determine the most suitable structure for your needs. Each type of business structure has advantages and disadvantages, and each comes with specific legal requirements. The UK government provides several options for business structures, each designated to meet different needs, from sole traders and partnerships to limited companies and more.

Let’s explore the most common structures and the unique benefits they offer.

Sole Trader

A sole trader is someone who runs their own business and gets to keep all their business profits after paying income tax. 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 the flexibility to set your hours and have complete control over business decisions. However, a sole trader is personally liable for all the business's debts.

While sole traders do need to register with HMRC for tax purposes, they are not required to register with Companies House. Sole traders are still subject to all relevant laws and regulations despite having limited resources. As a sole owner, you are responsible for organising all company accounts and business records unless they outsource to an expert accounting provider.

You must register a business as a sole trader if your business profits from self-employment exceed £1,000 in a tax year. Here's what you need to do if you decide to operate as a sole trader:

• Keep a record of your accounts
• Invest in good insurance
• Pay income tax on your profits
• Register for VAT (Value Added Tax) if your turnover is more than £90,000
• Assemble the paperwork before you register your 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 typically formalised through a written contract, known as a partnership agreement or partnership deed, which outlines how profits and losses will be distributed among the partners

If you want to register a Limited Liability Partnership in the UK, you need to register it with the Companies House. After registration, you must also notify HMRC for tax purposes. Partnerships, including LLPs, are legally binding agreements that offer some protection to all partners involved, depending on the structure chosen. In addition, the partnership may include one or more limited partners who provide financial support but are not involved in management.

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.
• Choose a business name that is unique. You can use our company name check tool to ensure your prospective company name hasn't already been taken. As a general rule of thumb, consider choosing a name that any other business in the world hasn't used. 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. The UK government maintains a list of sensitive words that you need to obtain permission to use in a business name. Once you have a registered company name, you can move on to the next step.
• Determine who will be the ‘nominated partner.'The nominated partner is responsible for registering the partnership with HMRC and submitting the partnership’s tax return. Each partner is responsible for filing their individual self-assessment tax returns.
• Register for VAT if the annual turnover exceeds £90,000.

This process applies to sole traders, limited companies, and partnerships: the first step to registering a business in the UK is to start with the government website. This will allow you to set up business bank accounts for tax-related matters and receive official recognition from HMRC.

You should register your business - whether it's a limited company, partnership, or sole trader entity - as soon as possible after establishing your business to avoid tax penalties, pay national insurance contributions, and fulfil your accounting obligations with HMRC. Sole traders should register by October 5th of their business’s second tax year (the tax year lies between 6 Apr to 5 Apr the following year), while limited companies must register with Companies House before commencing operations.

The registration process requires completing an online form on the UK government website, which typically takes about an hour. Before proceeding, ensure you are familiar with the terms, conditions and eligibility criteria relevant to your business structure.

During the registration process, you will need to provide the following information about your business:

• The business name
• Official company address (where it will be based)
• Your contact details – including email address and telephone number
• Your business 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 (for limited companies)

Once you complete the registration process, you will receive a UTR (Unique Taxpayer Reference)via post, which will be used in all your dealings with HMRC and is essential for managing your business’s tax obligations.

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

The registration process varies depending on the type of business you are starting, such as a limited company or LLP. You must choose a unique company name that complies with Companies House regulations, avoiding names that violate trademarks or are offensive. It’s advisable to check name availability before proceeding, as certain terms are restricted.

Once you have chosen your business name, you need to prepare the necessary documents/information, including:

• the Memorandum of Association (MoA) and Articles of Association (AoA): These are essential for forming a limited company, If you register your company online, you don’t need to write your own memorandum of association. It will be created automatically as part of your registration. You can either use standard articles (known as ‘model articles’) or write your own and upload or send them when you register your company
• Form IN01. This is the form used to apply for registration with Companies House
• SIC (Standard Industrial Classification) Code: This classifies your company’s business activities.
• Details of Directors and Shareholders: At least one director must be named and appointed

After submitting these documents, Companies House will review your application, Once approved, you will receive the Certificate of Incorporation, which will instantly legalise your business in the UK. And don't forget to register for Corporation Tax with HMRC within three months of starting business activities to stay compliant.