After deciding to start your business! You might wonder “How to register a business”. As it is the first step before starting your business venture. You need to know that there are multiple ways to register your business in the UK. The level of registration depends on different factors like your business type, size, number of owners or shareholders, etc.
Let’s delve deep into the details!
Why do You Need to Register Your Business?
To be legally recognised as a business, you need to register it. The foremost step of registration is to register it with HMRC to ensure you’re paying taxes accurately and on time. Other forms of registration might be getting a business licence that may be required as per your business size. This may include registering as an employer, registering as a home business or registering as a trading business.
How to Register a Business?
You must register your new business in the UK, but the registration process of all businesses is not the same. In this post, we’ll look at the registration processes of various businesses as per their business type, features and responsibilities.
Register as a Sole Trader
The most common form of business in the UK is a sole proprietorship. Registering as a sole trader is pretty simple. For it, you just need a National Insurance number. A sole trader is exclusively responsible for all profit and loss made. As a sole trader, you need to pay taxes and National Insurance. Here are the responsibilities of the sole trader:
- Keep track of expenses and sales
- Pay income tax and National Insurance
- Register for VAT if your earnings are above the VAT threshold of £85,000( voluntarily if you are earning below)
- Pay the business rates, if any
Register as a Partnership
Similar to sole tradership, a partnership is a business shared between two people. Both the partners are responsible for any gains and losses. Limited companies can also serve as a partner. Profit is distributed between partners and the taxes are separately paid based on their personal share. It requires the following while registration:
- Register as a nominated partner who will be liable to send tax returns but other partners need to do it separately and need to send their own tax returns
- Choose a name for the business
- Register the name of your business as a trademark
- Add your name on the official paperwork
- Register for VAT ( not compulsory for businesses with a turnover under £85,000)
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Register as a Limited Company
A limited company is a separate legal entity from its owners. It means if there is a big loss your personal finances are safe. A limited company requires proper incorporation. It needs to be registered with Companies house. It must:
- Choose a unique name and must place Ltd or limited at the end
- Register the name as a trademark
- Have a registered business address
- Appoint at least one director whose name and address will be publically available at Companies House
- Appoint a secretary if required
- Decide the shareholders
- Create a memorandum of association and article of association
- Register for corporation tax within 3 months of trading
How to Register your Business at Companies House?
You must register your limited companies at Companies house. The cost of registration depends on whether you register it by post or online. Here are the following things you need before registering:
- A unique company name
- A registered company address
- The name of one or more directors
- Nominated shareholders and details of their entitlement
- Your SIC code
- Your ‘memorandum of association’ and ‘articles of association’
- Information of PSCs (people with significant control) of your company, like those having large shares in the business
After registration, limited companies will provide the ‘certificate of incorporation’ confirming their legal status.
Quick Sum Up
Hopefully, you have got the answer: how to register a business? Remember the registration process may vary based on your business type, size, and other considerations. For example, some businesses related to law and accountancy need a license. Don’t forget to submit all the documents and paperwork required. Registering for sole tradership can be straightforward but registering as a limited company can be a daunting process. Therefore, it is advisable to take expert advice in this regard.
Disclaimer: This blog is intended for your general information on business registration.