How to Start and Register a Business in the UK

What you need to do to start a business in the UK, depends on your structure of business. Most businesses register as a sole trader, private limited company or partnership.

Sole traders

If you’re a sole trader, you run your own business as an individual and you’re self-employed. You can keep all your business profit after you’ve paid tax on it. You’re personally responsible for any losses your business makes. You must also follow certain rules on running and naming your business.

Your responsibilities

It’s simpler to start as a sole trader. You’ll need to:

• keep records of your business sales and expenses,

• send a Self Assessment tax return every year,

• pay Income Tax on your profit and Class 2 and Class 4 National Insurance.

You’ll need to apply for a National Insurance number if you’re moving to the UK to start a business.

 

More information you can find on GOV.UK website here.

 

I wrote a book “Self Employment UK Tax Guide 2017” which is free to download!

 

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Private limited companies

If you run business as a private limited company, this means the business is a separate legal entity. You are a shareholder; you hold all or a proportion of the company’s share capital. You serve the company as a director. You’re not personally liable for the firm’s debts as company finances are separate from your personal finances.

Setting up in business as a limited company involves a more complex formation process, and there are more reporting and management responsibilities.

You’ll need:

• a suitable company name,

• an address for the company,

• at least one director,

• details of the company’s shares - you need at least one shareholder,

• to check what your SIC code is - this identifies what your company does,

• details of people with significant control over your company, for example anyone with more than 25% shares or voting rights.

Once you have these details, you can register your company with Companies House. Keep in mind there is a registration fee.

After you’ve registered your company with Companies House, you’ll need to register for Corporation Tax. You’ll need to do this within 3 months of starting a business.

Your responsibilities

As a director of a limited company, you must:

• follow the company’s rules, shown in its articles of association,

• keep company records and report changes,

• file your accounts and your Company Tax Return,

• pay Corporation Tax,

• register for Self Assessment and send a personal Self Assessment tax return every year.

 

More information you can find on GOV.UK website here.

 

In my previous article I wrote 10 key advantages of LTD over Sole Trader.

 

Read article

 

Partnerships

A partnership is the simplest way for 2 or more people to run a business together. You share responsibility for your business’s debts. You also have accounting responsibilities.
A partner doesn’t have to be an actual person. For example, a limited company counts as a ‘legal person’ and can also be a partner.

When you set up a business partnership you need to:

• choose a name,

• choose a ‘nominated partner’,

• register with HMRC.

The ‘nominated partner’ is responsible for managing the partnership’s tax returns and keeping business records.

There are different rules for limited partnerships and limited liability partnerships (LLPs).

 

Find out more about being in a partnership and how to register on GOV.UK website here.

 

Things to consider

Other responsibilities for your type of business

You may have other responsibilities depending on what your business does for example, licences or permits, insurance. Also you need to check what your responsibilities are if you run your business from home or rent somewhere to run your business from.

Becoming an employer

There are things you’ll need to do if you take on your own employees. You have to register with HMRC for the PAYE Employer and run payroll.

VAT

You must register for VAT with HMRC if your business VAT taxable turnover is more than £85,000. You can register voluntarily if it suits your business, for example if you sell to other VAT-registered businesses and want to reclaim the VAT.

Working in construction industry

Register with HMRC for the Construction Industry Scheme (CIS) if you’re working in the construction industry as a subcontractor or contractor.

 

Choose the right business structure with our business consultant, if you are not sure which business model works the best for you.

Or talk to our accountant, if you are not sure what are your responsibilities depending on your business type.

 

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