Starting a business is an exciting endeavor, but you must know how to register a business in the United Kingdom before you can do so. There are several different ways to register your business, and the level of registration you need depends on the structure of your business and the number of shareholders or legal owners.
How you register a business depends on the type of business that you are trying to register. In the UK, there are three main types of business structures. These are, sole traders, partnerships and Limited companies.
Register a Business as a Sole traders
Sole traders in the UK must register with the government and pay taxes. Unlike limited companies, which must register with the Companies House, sole traders must pay income tax at the standard rate and National Insurance on all profits. They must pay taxes via a self-assessment tax return. Profits earned by a sole trader depend on their performance.
Sole traders in the UK with a turnover in excess of £85,000 must register for VAT. They also need to choose a business name. While small businesses do not need to register their names with Companies House, it is advisable to make sure that they do not conflict with existing trade marks on the government’s register. The records that a sole trader must keep are broad and cover a wide range of documents.
Sole traders are the most common type of business in the UK. Around 76% of all businesses in the country are sole traders. They are typically small and run by a single owner. Larger businesses often use private companies limited by shares. You can learn more about how to set up a limited company in our ultimate guide.
Partnership
The first step in registering a partnership business is to choose a name for your business. A name should be something that describes your business well, but not offensive. It should not contain any sensitive words or imply a special status or a legal obligation. It should also be free of trademarked terms.
The second step in registering a partnership is to register with HMRC not more than three month after the partnership starts to trade. HMRC will then issue the partnership with a Unique Tax Reference popularly known as UTR. If the partners do not already have a UTR, HMRC will also issue one to them individually.
Partnerships are often formed for a variety of reasons. One of these reasons is the ability to bring different skills and experiences to the table. The partners will also need to decide what role they will each play in the partnership and how they will split profits and risks.
Private Limited Company
If you’re planning to start a business in the UK, one of the best business structures to consider is a Private Limited Company. This structure has many advantages, including the fact that it is a separate legal entity that can be protected from personal liability. With a private limited company, you can rest assured that your assets are protected, and if your company fails, your liability will be limited to the unpaid shares.
The process of setting up a Private Limited Company in the UK is easy and fast. The process of forming a company usually takes a couple of hours online. Once your company is registered, the Registrar of Companies will issue a certificate of formation to you. This document is your business’s official identification.
To register a business in the UK, you should know that it is relatively simple. You can do so online or by submitting a hard copy in the post. The cost for online business registration is £12, while for hard copies, you will need to pay 40 and wait at least eight to 10 working days. Alternatively, you can hire a formation agency to help you with the process. Once you have completed these steps, you can begin the process of trading with your new business.
One important step in registering your business is choosing a name. A sole trader may choose to trade under their own name, but it is recommended that you choose a name that will avoid any confusion or conflict with another company. A limited company is required to register the name it wants, appoint a company secretary and directors, work out shares and shareholders, and write articles of association. Companies must register for corporation tax.
A limited company is another popular option for businesses. This type of business protects the personal assets of the owners by being a separate legal entity. It must be registered with the Companies House. The minimum share capital is £1.
In order to register a business in the UK, you must have a physical address for the company. The registered address will appear on a public register, which means that anyone who inspects it can see your residential address. Companies House has no legal power to remove your home address from your company’s public records. You must also maintain a contact address for your business, preferably at the registered office address.