How to register a business in the UK (Part 1)


Whether you’re running a small business from your home or selling goods and services online or from a store, it is a legal requirement to register your business on a UK record and failing to do so can result in substantial penalties. To avoid incurring a large fine and penalties at the early stage of your business, it’s better to register your business as soon as possible or before you start trading.

When you register your business, you can choose a company structure depending on the type of business you aim to run. You can register your business as a sole trader or as a limited company.

Here are the types of business structures to keep in mind when registering your business, and what they entail:

  1. Registering as a sole trader

    To register your business as a ‘sole trader’ means that you will be working on a self-employed basis. You need to be the sole owner and shareholder of your business to fall into this category. Registering your business under the category of a sole trader allows you full control and flexibility in the decision making of your business. An advantage of registering under a sole trader is that you will not need to list your business on a UK record (known as Companies House) accessibly to the public. You will only need to annually submit required financial paperwork to the HMRC. While this is the easiest option as you can quickly register yourself online, in this business model you are completely responsible for successes and failures of your business.
  2. Registering as a limited company

    Registering as a ‘limited company’ means that your business is registered as an independent entity and separates the legal and financial elements of the business from the people running it. This business model ensures a limited liability, as the individual is either an employee or a shareholder of the business. This business model requires a lot more paperwork but ensures your personal assets are protected. A limited company also pays a lower tax on their profits earned. The employees pay tax on their earning if it is over the threshold and the business pays tax on its profits. If the business is profitable directors can also take dividends from the business at a lower tax rate.
  3. Registering as a Partnership

    Another option is to register your business as a ‘partnership’ where you are going into a partnership with another individual. Under the Partnership Act 1890, this model is legally defined as, “two or more people ‘trading in common with a view to profit’ and is the format normally chosen for a business that will be owned by two or more sole traders”. This company structure doesn’t require you to be registered with Companies House. Partners are jointly liable for the company, therefore there’s a risk as you can be held responsible for the other partner as well.

Other company structures include Limited Company by Guarantee, Limited Company by Shares, Social Enterprises, Common Interest Company, Charities etc.

Keep a look out for our next blog, where you can find out how to register your business based on the company structure you choose. If you have any questions on registering or getting started with your business, contact the team today