If you want to start a business - whether you’re operating as a sole trader or setting up a limited company - you'll need to register your business. We explain the steps you need to take to comply with government regulations
How to register a limited company
The first thing to do is choose your company name. Before you register your business, you’ll first need to check your company name is available with Companies House. It’s easy to do this by using the Companies House name availability checker. You must also ensure that your business name complies with government rules. Your company name cannot be too similar to another company name or a trade mark and it must not be offensive or contain sensitive words or phrases.
The next step is to register your company with Companies House - this applies to limited companies as well as limited liability partnerships (LLPs). You can do this yourself on the government website. You also have the options of registering by post, using an agent or using third-party software.
In order to register, you’ll need three pieces of personal information about yourself and your shareholders, such as National Insurance number, passport number, mother’s maiden name or town of birth. You will have to appoint at least one director; their name and address will be published on the Companies House website.
In order to set up your company, you will need to create three key documents:
- Prescribed particulars explaining your business structure and what each shareholder is entitled to;
- A memorandum of association, a legal declaration in which all shareholders agree to start the limited company;
- Articles of association, the rules about how the company will run, as agreed by all the shareholders and directors.
Once you’ve registered your company, you’ll be given a Certificate of Incorporation which has your company number on it and the date of its formation.
You can also use the company registration process to register for Corporation Tax and PAYE at the same time. You’ll need to register for PAYE if you’re employing staff, including yourself. If you’ve registered with Companies House by post, via an agent or using third-party software, then you’ll need to register for Corporation Tax separately. You must register for Corporation Tax within three months of registering your company.
As a taxpayer, you’ll already have a Government Gateway ID but you will need to create a specific Government Gateway user ID and password for your company when you register it.
How much does it cost to register a company with Companies House?
The cost of registering your company depends on how you register your business (digital, software or paper) and how quickly you want the service. For example, if you register online you’ll be registered within 24 hours. Postal applications using form IN01 take up to ten days. There are also different fees for registering using software or for same-day registration.
How to register your business as a sole trader
To get started as a sole trader, you need to tell HMRC that you are self-employed so that you can pay tax through self assessment. All you need is your National Insurance number. As a sole trader, you’ll need to keep records of your expenses and income and complete a tax return every year. You will have to pay income tax on your profits as well as Class 2 and Class 4 National Insurance.
You do not need a business name to trade as a sole trader although you can trade under a business name if you want to - but you cannot use the term limited in your business name unless you are registered as a limited company with Companies House. You’ll also need to make sure no-one else is trading under the business name you choose.
Sole traders are encouraged by HMRC to register as soon as possible after they start trading, but you can actually register at any time before October 5 in the second tax year after you started trading.
How to register as a partnership
A partnership business structure is similar to a sole trader set-up but with the profits shared as well as the responsibility for losses. If you’re registering a partnership you’ll need to register a nominated partner who will be responsible for completing the company tax returns. Individual partners must pay tax on their personal share of the profits. Business partnerships must be registered by 5 October in the second tax year after the partnership started trading.
How to register for VAT
Registering for VAT is mandatory if your turnover is over £90,000 a year from 1 April 2024 (previously £85,000). However, you can voluntarily register for VAT if your turnover is below this, allowing you to reclaim VAT on your purchases. When you register for VAT, you’ll be sent a VAT registration certificate which includes your VAT number and details of when to file your first VAT return and make your first payment.
How to register for the Construction Industry Scheme
You must register for the Construction Industry Scheme (CIS) if you’re working in the construction industry as a subcontractor or a contractor and you’re operating as a sole trader, the owner of a limited company or a partner in a partnership or trust. You’ll need your legal business name or the name you’re trading under, your National Insurance number, your Unique Taxpayer Reference Number (UTR) and your VAT registration number (if applicable). If you are both a subcontractor and a contractor, you’ll need to register for CIS as both.
How to register your business name as a trade mark
Registering your business name as a trade mark is not a legal requirement, but it can be a good idea if you want to stop other people from trading under the same name. When you register your trade mark, you’ll be able to put the ® symbol next to your brand - to show that it’s yours and warn others against using it. It also means you can take legal action against anyone who uses your brand without your permission.
