Starting a business comes with huge responsibilities. Apart from trying to bring your business idea to life through strategic planning, there’s a lot to be done in order to make the business a legal entity.

In the UK, as with most other countries, registering your business is one of the first steps you have to take as a business owner.

This could be a daunting task for new business owners, and that’s why we prepared this guide to help you with the knowledge you need to register your business.

You’ll understand your proposed business structure and the relevant authorities responsible for business registration in the  UK.

If you stick with us to the end, you’ll get acquainted with the right way to register your business in the UK and any post-registration requirements you might need to fulfil. 

Types of business structures in the UK.

Defining your business structure is a very important part of your business registration process.

It also defines your business registration process. To put it simply, a business structure clearly states how a company runs its operations in totality.

In the UK, your business structure could determine the authority responsible for your business registration: the Companies House or HM Revenue and Customs(HMRC).

It’s important to get more information from professionals before choosing any business structure. 

Sole trader

This business structure is owned by one person. The affairs of the business cannot be separated from the owner. This means that, unlike other business structures, your business as a sole trader is not a separate legal entity from you.

The HRMC is in charge of the business registration of sole trader companies. Before becoming a sole trader in the UK, you must own a National Insurance number and pay income tax.

The government also requires a self-assessment test to check if it is right for you. You have free rein when it comes to naming your sole trader company, but you can’t:

• Use offensive words
• Call it a limited liability company(LLC) or a public limited company(PLC).

Partnerships 

A partnership is formed by two or more people coming together to start a business.

Most partnerships are registered with the HMRC except the limited liability partnership(LLP), which is registered with the Companies House.

These people are called partners, and they decide how to share dividends, profit, and responsibilities. Business partnerships could be:

• General partnerships: All the partners are equal and will share their profits and debts equally. 
• Limited partnerships: Here, one of the partners is a general partner who is liable for any debts that may occur and is also in charge of the business operations. The other partner(s) are limited partners who are only liable for the amount they invested in the business. 
• Limited liability partnerships(LLP): There is no general partner here. All the partners are limited partners, only liable for the amount they invested in the business, and only pay income taxes from their share of the company’s profits. Unlike other partnerships, they’re registered with the Companies House.

Limited companies

Limited companies are separate legal entities on their own. As the owner of a limited company, you’re only liable for the amount you invested in the business. These companies are registered with the Companies House. There are two ways to categorise limited companies:

By their profit sharing: Limited companies could either be:

• Limited by shares: This means that they have shareholders and keep the profit they make after taxes. These companies are for-profit.
• Limited by guarantee: These are non-profit organisations that reinvest their profits. Instead of shareholders, they have guarantors who are only liable for the amount of their guarantees.

By their listing: Limited companies can also be differentiated by the availability of their shares in the stock market. 

• Private Limited Companies(Ltd): They have no minimum investment amount for their shareholders, and their shares are not publicly listed in the stock market. 
• Public Limited Companies(PLC): These companies have their shares listed on the stock market. In the UK, you cannot become a PLC unless you have publicly issued at least £50,000 shares.

Key factors to consider when choosing a business structure.

1. Administrative and legal requirements: Bigger business structures have more administrative and legal load than others. The law requires limited liability companies to file more paperwork and reports than sole trader companies and partnerships. 
2. Ease of setup: Starting a limited liability company will require more red tape than a sole trader company. It also involves a lot more financial commitment to get registered.
3. Risk and liability: Limited liability companies are separate legal entities, so they present less risk to their owners. The same cannot be said about sole traders or partnerships. 
4. Growth and scalability: When it comes to securing funding for growth, limited companies present a lot less risk to investors or creditors than sole traders. Limited companies also have listed shares they can use as security for loans.

Business registration overview: Why you need to register your UK business.

When you decide to start a business in the UK, registering your business idea should come right after you have your business plan in place.

A business registration turns your idea/dream into a legal entity. It’s like registering a birth with the government. 

Before registering your business, you should have a suitable name in place for your company. Naming a business is a careful, delicate process since business names are unique representations of brands.

Ensure that your chosen name does not violate any legal stipulations.  You can use tools like Company Name Check Tool or Companies House Name Checker to check that the name you’ve chosen is not already in use. 

Registering your business involves submitting the right documents to the relevant authorities. Once this is done, you’re officially the owner of a business recognised by the law, and you’ll receive a certificate of incorporation as confirmation. 

Not every small business in the UK needs to be registered. By law, you should register as a sole trader if you’re self-employed and you earn more than £1,000 in a tax year. If, however, you make over £30,000 as profit, you’ll have to register as a limited company.

Citizens of other countries who want to do business in the UK can also register their businesses in the UK even if they don’t live in the country. All they need is a legal UK office address.

You’re probably wondering why you need to go to all this trouble if a business registration involves all these processes. Apart from the fact that it makes your business more credible, it’s important to register your business because: 

• A registered business offers its owners legal protection. As a registered business owner, the business is a separate entity from you. It can sue and be sued, so you’re not liable for the business’s debts or obligations. 
• A registered business can have its own bank account. This lends more credibility to your company and also helps you to manage and track your company’s finances efficiently. 
• Many contracts and partnerships are only accessible to people with registered businesses. As a registered business owner, you have access to the opportunity to secure more funding to grow your business. 
• Only registered businesses enjoy certain tax benefits. These benefits can increase your finances tremendously.

How to register a business in the UK. 

Since we’ve already explained the first steps of business registration, which are tips on choosing a business name and structure, let’s get started on the other steps you need to register your business in the UK. 

Prepare the required documentation. 

Every business structure needs to submit specific documents during registration. 

1. Sole trader companies need a Self-assessment tax return, National Insurance number and the personal details of the business owner.
2. Partnerships need the partnership deed and the partners' personal details.
3. Limited companies need directors' and shareholders' details, memorandum of association(MOA), articles of association(AOA), and share capital information. These documents must be duly signed by the shareholders and directors named. When you register your business online, your MOA is automatically generated. The AOA, on the other hand, is a document detailing the company’s operating policies. 

Set up an office address.

Set up a physical address for your company using a legal UK address. This needs to be a physical location where you can receive and prove that you’ve received documents. 

Get a Standard Industrial Classification of Economic Activities (SIC) code.

 This code helps the authorities understand and classify your business based on industry and your business activities for statistical purposes. You can find your accurate SIC code here.

Register with the right authorities.

When you have the proper documents ready, it’s time to register formally with the right authorities. Registration can be done online, by post, or by an agent.

If you’d like to register online, please note that the HMRC caters to sole traders and partnership companies except the Limited Liability Partnership(LLP), while the Companies House caters to all Limited Companies and the LLP.

For limited companies, after successful registration, you’ll be issued a Certificate of Incorporation to confirm that your business is now a legal entity.

Post-business registration requirements for UK Businesses.

So, you’ve registered your business and have set the ball rolling on business operations. But that’s not all.

As a business owner, the responsibilities you have towards your business never end. Here are some extra requirements to help keep your business legally fit:

1. Open a business bank account. Having a business bank account keeps you accountable and also separates your personal finances from your company’s funds. This is not very necessary for partnerships and sole traders. However, limited companies are separate entities from their owners and need to be treated as such. Open a GBP account here
2. File annual reports. These annual reports give the Companies House an account of your current financial position. You’re required by law to file these reports annually or risk penalties and possible dissolution. 
3. Pay corporation tax. In the UK, corporation tax is about 19% of your profits, and you’re required to file a tax return annually. 
4. Notify relevant authorities of any changes. Over time, if your company has any changes in address, personal details of stakeholders or any other important information, it’s important to inform Companies House within 14 days of these changes taking place. 
5. Ensure that company records are updated regularly. Keeping up-to-date and accurate records could help you avoid issues with the law. The best way to do this is to have an efficient record-keeping system in place.

Congratulations, you just demystified the entire process of business registration in the UK!

Now, you have everything you need to register that business idea and bring it to reality. Following the steps listed in this guide will help you get started on the process. 

This guide provides the basic knowledge you need to start registering your business, but don’t hesitate to seek professional help or use resources from HMRC and Companies House if you need to.

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