Starting your own business can be a rewarding activity, even though it comes with its own challenges. But, before starting, it is advisable to register as a business because it will make you look more professional to customers. This 6-step guide will show you how to register as a business in the UK.
Do I Need to Register My UK Business?
Your company must be registered if you want it legally recognized by the government. How you will incorporate it depends on its scale and size.
- If you are self-employed and earn over £1,000 annually, you must register as a sole trader with Her Majesty’s Revenue and Customs (HMRC).
- If the annual profit exceeds £30,000, you must incorporate it as a limited company. We will dive deeper into these legal structures below.
Do I Need to Register an Online Business in the UK?
Yes, it is essential to register your online business with HMRC for tax purposes and Companies House if you want to open a corporate bank account and receive money from customers.
6 Steps to Register a Business in the UK
- Choose a Legal Structure
You must first choose what type of entity you want to incorporate. The most common ones include:
This type of firm has a separate legal identity from its owners. It offers limited liability, as in, the owners aren’t personally responsible for any debts or claims accrued by their firm.
There are two main types of limited companies: public and private. The shares of a public firm can be traded freely on a stock exchange, unlike with a private one. It is advisable to use this corporate structure if you plan to seek outside investors.
This is a one-person entity wherein the owner is personally liable for any debts held by their firm.
This is when two or more persons agree to form a company and share responsibility for managing it. There are three types of partnership:
- General: The owners are personally responsible for any liabilities against their entity.
- Limited: The shareholders are personally liable only to the extent of capital they invested in their entity.
- Limited liability: The owners aren’t personally responsible for company debts.
- Choose a Name
A name is the first thing that sets your firm apart from the competition, so pick a unique one. Ensure that the name you want hasn’t been taken by another person or is similar to an established trademark. There are also some regulated words that require special permission to use, e.g., “law,” “insurance,” “medicine,” etc.
- Choose an Official Address
Every firm registered in the U.K. must have a physical location where mail can be delivered by the government. This address is part of the public record, but it mustn’t be the same location from which you run your business.
For instance, if you run it from your home but don’t want your address to be public, you can find a professional, like Osome, that offers their registered address for a fee.
- Memorandum and Articles of Association
You must submit a memorandum of association (MOA) and articles of association (AOA) for your firm. The former is a signed declaration by all shareholders agreeing to form a corporation, while the latter contains rules governing the corporation.
- Get Your SIC Code
As part of the registration, you will need to get your Standard Industrial Classification of Economic Activities (SIC) code. This code is used by Companies House to identify your industry.
- Certificate of Incorporation
Once you have met all the requirements, submit your application to Companies House and wait for the approval. If approved, you will receive a Certificate of Incorporation confirming that your corporation is now recognized by the government.
How Much Does It Cost to Register a Business in the UK?
Registering a business in the UK isn’t expensive. It costs just £12 to do it online or £40 if you submit the application by post.
Choosing the Right Payment Service Provider for Your New UK Business
If you sell products online, it is important to choose a suitable payment gateway that will enable you to receive money from customers. The most important thing to watch out for is the transaction fee; it could be a flat fee, a fixed percentage, or both. Some gateways also charge monthly fees regardless of how many transactions you process with them.
We have provided a quick guide on registering a business in the UK. It is pretty easy to follow the steps, but if you need help, Osome is available to provide it.