Why do you need to register your company?

by Vidit Agarwal Marketing Director

Starting a business in the UK is now a popular choice for entrepreneurs, with start-up companies being a common sideliner for those in full-time work or a way to escape the corporate office for the 192,000 employees currently working for the country’s small creative businesses. With increasing numbers of people interested in how to start a business, it’s arguably even more important to know how to register a business – that is, making sure you’re setting up a business in a legal way

Why should you register a Company?

Companies must be registered in order to be legally recognised as a business in the UK. At the very least you will need to register with HMRC to ensure you are paying your taxes to the correct amount and deadline. Other forms of registration for licences may be required depending on the size of your business or should be considered as you grow. These could include registering as an employer registering as an at-home business or branching out into street trading.

What Types of Businesses Need to Register?

Every new company in the UK must register, though the process may vary depending on what type of business you have. Here we will explain the features and responsibilities of different business structures.

How to register as a sole trader?

The most common form of small company registration is as a “sole trader”. All you need to get off the ground is a National Insurance (NI) number. Sole traders also count as self-employed and must register as such. If you register as a sole trader, you must do the following:

Record your expenses and sales, Pay income tax.

Register for value-added tax (VAT) (mandatory for turnover over £85,000, though you can voluntarily register if your turnover is below this, allowing you to reclaim VAT on your purchases)

Pay any business rates that may be applied to the property you operate from

Include your name and business name on all official paperwork. You do not need an official business name to be a sole trader, nor do you need to register the name you select

How to register as a business partnership?

A partnership structure is similar to a sole trader setup but is shared between several people. Partners must be collectively responsible for losses the business incurs and any bills for stock, equipment, etc. Partners do not have to be individuals; limited companies can also serve as partners in a business. Profit is shared between partners, but each separate partner must pay tax on their personal share. Partnership company registration requires the following:

How to register as a limited company?

A limited company exists as a separate legal entity from the individuals who own and run it. As such, the finances of the business are not tied to the personal finances of owners or partners. Setting up a limited company requires ‘incorporation’ i.e. having the business registered with Companies House. Limited companies must:

Pick a company name – limited company names must end in “Limited” or “Ltd” and not resemble the name of another company.
Choose a business name if you do not wish to trade under the registered company name, this name cannot include “Limited” or “Ltd” in the title.
Register their name as a trademark to prevent other companies from trading under the same title
Be aware of when and how their name should be displayed
Ensure they have a UK company location to nominate when registering a business address

Appoint at least one director, appoint a secretary and decide on shareholders.

Registering a business at Companies House

This must be completed before registering for corporation tax and requires the following:

A selected company name (which does not copy or resemble other trademark business names or include sensitive or offensive words)
A company address- The name of one or more directors
Nominated shareholders and details of their entitlement
Your SIC code
Your ‘memorandum of association’ and ‘articles of association’
Details of PSCs (people with significant control) of your company, such as those with relatively large shares in the business.

What are the Requirements for registering a UK Limited company?

1. Company Name: The name of your company should be unique and should not contain any prohibited words.

2. Director: Only one director is required for the company formation but there is no limit to the number of directors you can appoint. The age of every director should be 16+.

3. Shareholder: Only one shareholder is required but there is no limit to the number of shareholders you can appoint.

4. Registered address: This address of the company must mandatorily be in the UK and will appear on the public register.

5. Directors' service address: Each director, secretary and PSC must provide a service address for Companies House. This address can be located anywhere in the world but it will be on the public record.