Starting a business in the UK can be an exciting venture, and the first key step is to register as a business. Getting your registration right is essential for legal compliance and the growth of your company. In this guide, we’ll walk you through everything you need to know on how to register a business in the UK.
Do I need to register my business?
You must register if your business generates taxable income. UK business registration depends on the type of business structure you choose for your company. If you’re a sole trader, you’ll need to register with HMRC. Partnerships and limited companies need to register with Companies House.
Which business types are there and which should I pick?
One of the first legal responsibilities you need to make is to choose a business type. This decision can impact your day-to-day operations. In the UK, the most common business structures are sole traders, partnerships, and limited companies.
Sole trader
A sole trader is the most simple business structure. It’s ideal for freelancers and small business owners. You can learn more about starting out on your own in our guide to sole traders vs. Limited companies.
Key features:
You’re the sole owner of the business and keep all profits after tax.
You’re personally responsible for all debts and liabilities.
There is minimal setup and ongoing filing requirements.
Advantages ✅ | Disadvantages ❌ |
|---|---|
A sole trader is easy and cost-effective to set up | Your personal assets are at risk if the business incurs debts |
You have full control over decision-making | There are limited opportunities for growth and potential investment |
There are fewer reporting obligations compared to other structures |
Best for: Sole traders are a good option for individuals starting small businesses with minimal financial risks.
Partnership
A partnership involves two or more individuals who share ownership and responsibility for a business. There are two main types: general partnerships and limited partnerships.
Key features:
Partners share profits and are both responsible and liable.
A partnership agreement defines each partner’s role and share of profits.
Advantages ✅ | Disadvantages ❌ |
|---|---|
Shared responsibilities between partners reduce the workload | There is personal liability for debts unless you’re in a limited partnership |
Partners can both offer resources and expertise | Disagreements between partners can affect the business |
Simple to set up compared to a limited company | Split profit reduces individual earnings |
Best for: Partnerships work well for professionals like solicitors, architects, or family-run businesses.
Limited company
A limited company is a separate legal entity from its owners (shareholders) and managers (directors). This reduces the legal responsibility for its owners and it can be private (Ltd) or public (PLC).
Key features:
Owners have limited liability, meaning personal assets are safe if the business fails.
This is a formal structure with regulatory and reporting requirements.
You can sell shares to raise capital. Public companies can list shares on the stock market while private companies have a limit on share distribution.
Advantages ✅ | Disadvantages ❌ |
|---|---|
There is reduced personal financial risk | More complex and costly to set up |
It’s easier to attract investment and grow | There are greater administrative and legal obligations, including annual accounts and Corporation Tax filings |
A limited company is credible and professional |
Best for: A limited company is ideal for businesses looking to grow and raise capital while protecting their personal assets.
Choosing the right structure
When deciding on a business type, you need to consider these factors:
Risk tolerance: If you want to protect your personal assets, a limited company can be a safer option.
Business size and scope: The size of your business and future goals can influence your choice of a sole trader or limited company.
Tax implications: There are varying tax obligations for each structure.
Growth potential: If you plan to attract investors or expand, a limited company is the most flexible choice.
💡Editor's insight: “I find that the easiest way to choose a business structure is to look at the specific needs of your business. This will help you pick the best structure that aligns with your goals and vision for success.”
Seven steps to register a business in the UK
Here are seven crucial steps when registering a business in the UK. These will make sure your business complies with legal requirements and is ready for success:
1. Choose your business structure
You need to find the right business structure for your company.
Sole trader: Ideal for small operations or freelancers, it’s simple but comes with personal liability for debts.
Partnership: Suited for two or more people with shared profits, resources and responsibilities.
Limited company: A limited company is ideal for businesses with growth potential or investors.
2. Pick a unique business name
Your business name is an important part of your brand identity.
For sole traders or partnerships: You can choose a unique name with fewer restrictions.
For limited companies: You can use the Companies House name-checker tool to confirm availability for a business name.
3. Register with Companies House (for limited companies)
If you’re setting up a limited company, registration with Companies House is mandatory. Incorporation documents required:
Memorandum of association: A memorandum of association is a legal document signed by all initial shareholders.
Articles of association: This details how the company will operate.
Details of directors and shareholders: Include names, addresses, and roles.
Once registered, you’ll receive a Certificate of Incorporation to confirm your company’s existence.
4. Register with HMRC
All businesses must notify HMRC for tax purposes.
Sole traders and partnerships: Register for self-assessment to report income and expenses.
Limited companies: Register for corporation tax within three months of starting to trade.
You must register for VAT (if turnover exceeds £90,000) or PAYE if you’re hiring employees. HMRC will send reminders for tax deadlines and you should keep accurate records from day one.
5. Register a business bank account
If you're registering a limited company, you're required to open a business bank account. Plus, you should separate personal and business finances to manage finances easily.
Sole traders: A business bank account makes tracking income and expenses easier.
Limited companies and partnerships: To stay compliant, you need to maintain a separate account.
💡Editor's insight: “When looking for a bank account, compare fees and how easy it is to integrate with accounting software. You also want good customer support. A professional bank account will help to keep finances up to date.”
6. Secure any necessary licenses or permits
Depending on your industry, you may need specific licenses to be compliant such as:
Food business licenses for catering or restaurants
Alcohol licenses for pubs and bars
Professional certifications for professions like financial advisors or healthcare providers
You should check with your local council or the UK Government website to confirm what’s required for your business sector to avoid fines.
7. Set up business insurance
Insurance is essential to protect your business against risks and liabilities.
Public liability insurance: Protects claims related to third-party injuries or property damage.
Employer’s liability insurance: This is a legal requirement if you employ staff.
Professional indemnity insurance: Covers claims of negligence or errors in professional services.
You should research industry-specific policies to ensure you’re covered. Insurance protects your business and will give reassurance to clients and partners.
How much does it cost to register a business?
The cost of registering your business varies depending on the structure:
Sole traders: Free registration with HMRC.
Limited companies: £50 to register online with Companies House (or £71 for a paper application.)
Extra costs may include domain names, branding, and professional advice.
Are there penalties for late registration?
Yes, failing to register your business on time can lead to penalties:
Sole traders must register with HMRC by 5 October of the second tax year after they start trading.
Limited companies must register with Companies House before trading. Failing to do so can lead to financial penalties.
FAQs
Do I have to register my company?
If you are operating a business that generates taxable income, you need to register the company.
When do I need to register my business with HMRC?
You must register by 5 October after the end of the tax year in which you started trading. For limited companies, you need to register for corporation tax within three months of starting to trade.
What documents do I need to register my business?
For sole traders, you need your National Insurance number. Limited companies require:
Memorandum of association
Articles of association
Details of directors, shareholders, and registered office address
Do I need to register a small business in the UK?
Yes, even small businesses need to register if they earn taxable income. We can offer small business legal help when starting your business.
Final thoughts
Registering a business in the UK is a vital step toward achieving your dreams. By choosing the right structure and staying compliant, you set a strong foundation for success. Whether you’re a sole trader or planning to launch a limited company, we can give you advice on starting your business. Get in touch today for a free quote and see how we can help.
References
Company name availability checker from gov.uk
Register as a sole trader from gov.uk
What insurance does a small business need from gov.uk
Disclaimer: This article only provides general information and does not constitute professional advice. For any specific questions, consult a qualified accountant or business advisor. Bear in mind that tax rules can change and will differ based on your circumstances.