If you live and own a business within the UK, you might be looking to register it. Not everyone will want to or need to, but, for those that do, you will want to know what type of registration you’ll need.
Why should I register my business?
Starting a business in the UK has become a popular choice for many people. A lot of folks do it on the side while working full-time to make extra money. In fact, 44% of Brits have a side hustle, and for some, it turns into a successful business. The dream for some.
If you’re thinking about starting a business, it’s crucial to know how to register it properly. Registering your business is the legal way of setting it up. Without proper registration, your business won’t be recognised as legal in the UK. So, why is registration important?
Firstly, registration is necessary for your business to be legally recognised in the UK. At the very least, you need to register with Her Majesty’s Revenue and Customs (HMRC) to ensure you pay your taxes correctly and on time. You may also need other forms of licences.
Types of businesses that need to register
Sole trader
- Most small businesses start as sole traders.
- All you need is a National Insurance (NI) number.
- You get to keep all your business profits after taxes, but you’re personally responsible for any losses.
- All expenses and sales must be recorded, you must pay income tax, and register for VAT if your turnover is over £85,000.
- You don’t need an official business name, but you must include your name and business name on all paperwork.
Business partnership
- Similar to a sole trader, but shared between several people.
- Partners share profits, and each partner pays tax on their share.
- You need a nominated partner responsible for tax returns.
- Choosing a business name is essential, and you might want to register it as a trademark.
- Business partnerships must be registered by 5 October in the second tax year.
Limited company
- A separate legal entity from the owners.
- Finances are separate from personal finances.
- Requires incorporation with Companies House.
- You need to pick a company name, choose shareholders, appoint directors, and create legal documents like the memorandum and articles of association.
- Register for corporation tax within 3 months of starting your business.
Registering with Companies House is a must for limited companies, and the cost depends on whether you do it online or by post. After registration, you’ll receive a ‘certificate of incorporation’ confirming your business is legally recognised.
Remember to always seek professional opinions if you’re unsure on where your business stands. This is simply a guide and not a legal, government document. All brands have to start somewhere, so, happy business-ing!
