How to Register a Business in the UK: A Step-by-Step Guide
Registering a business in the UK is usually simpler than people expect, but who you register with depends on how you set up. Sole traders register with HMRC, limited companies with Companies House, and partnerships have their own route. This guide walks you through the choices and steps in order. It is general information, not legal or tax advice: rules change, so check GOV.UK and HMRC or speak to an accountant before you act.
Key takeaways
- Sole traders register with HMRC for Self Assessment, by 5 October after the end of the tax year in which they started.
- Limited companies register with Companies House, which creates a separate legal entity.
- Partnerships, business names, VAT and licences each add their own steps.
- The VAT registration threshold is £90,000 of taxable turnover, and you can register voluntarily below it.
- Licensing rules depend on your activity and local council, so check before you start trading.
In the UK, "registering a business" can mean several different things: telling HMRC you are self-employed, incorporating a company, registering a partnership, registering for VAT or getting a licence from your council. Most new businesses only need one or two of these at the start, but knowing which ones apply to you avoids penalties and delays.
The steps below follow the order most founders work through. If you are in Scotland, Wales or Northern Ireland, the main HMRC and Companies House processes apply across the UK, but some licensing and local rules differ.
Step 1: Choose your business structure
Your structure decides where you register, how you pay tax and how much personal risk you carry. The three most common options for small businesses are:
| Structure | Register with | Personal liability | Typical fit |
|---|---|---|---|
| Sole trader | HMRC (Self Assessment) | You are personally responsible for business debts | Freelancers and small one-person businesses |
| Limited company | Companies House, then HMRC for Corporation Tax | Usually limited to what you invest | Growing businesses, those wanting separation or outside investment |
| Partnership | HMRC, with each partner registering for Self Assessment | Partners usually share responsibility for debts | Two or more people running a business together |
There are other structures, such as limited liability partnerships and community interest companies, with their own rules. The choice has tax consequences that depend on your profits and circumstances, so it is worth a conversation with an accountant before you decide.
Pro tip
Many people start as a sole trader because it is simple and cheap to run, then move to a limited company once profits or risks grow. You do not have to pick the "forever" structure on day one, but switching later involves some admin.
Step 2: Register as a sole trader with HMRC
If you are self-employed as a sole trader, you register with HMRC for Self Assessment. You then file a tax return each year and pay Income Tax and National Insurance on your profits.
- Check that you need to register. HMRC publishes guidance on when self-employment income must be reported. If in doubt, check GOV.UK.
- Gather your details. You will need personal details, your National Insurance number and information about your business.
- Register online through GOV.UK. Follow HMRC's registration process for Self Assessment as a self-employed person.
- Keep your Unique Taxpayer Reference safe. HMRC will send it to you. You need it to file returns.
- Start keeping records. Record income and expenses from your first sale.
Common mistake
Assuming you can wait until your first tax return is due. Registration has its own deadline, earlier than the filing deadline. Register as soon as you start trading so you are not chasing the date later.
Step 3: Or register a limited company with Companies House
A limited company is a separate legal entity from its owners. You register, or "incorporate," it with Companies House. Once registered, the company has its own obligations, including filing accounts and keeping its public record up to date, and it registers with HMRC for Corporation Tax.
To incorporate, you typically need:
- A company name that meets the naming rules and is not already taken
- A registered office address in the UK
- At least one director
- At least one shareholder, who can be the same person as the director
- Details of people with significant control over the company
- Articles of association, the company's rulebook, which can be standard model articles
Most small companies register online through GOV.UK. Companies House sets its own fees and processes, which can change, so check the current requirements on its pages before you apply.
Limited company: pros
- Personal liability is usually limited
- Can look more established to some clients
- Easier to bring in shareholders
Limited company: cons
- More filing and admin than a sole trader
- Directors' details are on a public register
- Taking money out follows company rules
Step 4: Registering a partnership
In an ordinary partnership, two or more people run a business together and share the profits. One partner is usually nominated to register the partnership with HMRC and handle the partnership tax return, and each partner registers individually for Self Assessment and reports their share of profits.
A written partnership agreement is not always legally required, but it is strongly advisable. It should cover how profits are split, who makes decisions, what happens if a partner wants to leave and how disputes are settled. A solicitor can help you draft one.
Example
Imagine two decorators, Priya and Tom, who decide to work together. They agree a 50/50 profit split, write it into a short partnership agreement and nominate Priya to register the partnership with HMRC. Each of them also registers for Self Assessment. A year later they consider a limited company, and their accountant compares the two options using their actual profits.
Step 5: Choose and protect your business name
Sole traders and partnerships can trade under their own names or a separate business name. There are rules on what you can and cannot use, such as names that suggest a connection to government or include certain sensitive words without permission. You also cannot use a name that is the same as an existing registered trade mark in a way that infringes it.
For limited companies, the name is registered at Companies House and must be unique on the register. Check the company register and the trade mark register before you commit to signage, a website or packaging.
Step 6: VAT and Making Tax Digital
VAT registration is separate from your business registration. You must register for VAT if your VAT-taxable turnover goes over the threshold, currently £90,000, and you can choose to register voluntarily below it. Voluntary registration can make sense in some cases, such as when most of your customers are VAT-registered businesses, but it also adds admin.
Making Tax Digital is HMRC's programme requiring many businesses to keep digital records and submit returns using compatible software. It already applies to VAT-registered businesses and is being extended to more self-employed people and landlords over time. Check which rules apply to you on GOV.UK and choose bookkeeping software that supports them.
Step 7: Check licences and other registrations
Many businesses need nothing more than HMRC or Companies House registration. Others need a licence or extra registration before they can trade. Common examples include:
- Food businesses: must register with their local council at least 28 days before trading, including those run from home.
- Alcohol, entertainment and late-night refreshment: usually need licences from the local council.
- Street trading and markets: often require a council licence or permission.
- Taxis, childcare, health and beauty treatments: may need specific licences or registration with a regulator.
- Employing staff: register as an employer with HMRC and check your duties, such as workplace pensions and employers' liability insurance.
- Handling personal data: check whether you need to pay a data protection fee to the Information Commissioner's Office.
GOV.UK has a licence finder and guidance by business type. Your local council's website is also a good place to check local rules.
Your UK registration checklist
- Choose sole trader, limited company or partnership
- Sole trader: register for Self Assessment with HMRC by 5 October after your first tax year
- Limited company: incorporate with Companies House and register for Corporation Tax
- Partnership: nominate a partner to register and sign a partnership agreement
- Check your business name against the company and trade mark registers
- Track turnover against the VAT threshold and decide on voluntary registration
- Choose bookkeeping software that supports Making Tax Digital
- Check licences with GOV.UK and your local council
- Register as an employer before paying staff
Frequently asked questions
Do I need to register a business before I make my first sale?
Not always on the same day, but you should register promptly. Sole traders have a Self Assessment registration deadline, food businesses must register with their council at least 28 days before trading, and some activities need a licence before you begin. Check what applies to your business before you start selling.
Can I be employed and a sole trader at the same time?
Yes. Many people run a business alongside a job. You still register with HMRC for Self Assessment if you need to report your self-employment income. Check your employment contract for any restrictions on outside work.
Is a sole trader or a limited company better for tax?
It depends on your profits, how you take money out and your personal circumstances. Rates and allowances change, so ask an accountant to compare both options using your own figures.
Do I need a business bank account in the UK?
A limited company needs its own account because it is a separate legal entity. Sole traders are not always required to have one, but a separate account makes record-keeping and Self Assessment much easier.
Related reading
The bottom line
To register a business in the UK, first choose your structure. Sole traders register with HMRC for Self Assessment, limited companies incorporate at Companies House, and partnerships register through a nominated partner with HMRC. Then check your business name, keep an eye on the VAT threshold, set up records that meet Making Tax Digital and confirm any licences you need.
Thresholds, deadlines and fees change, so always confirm the current rules on GOV.UK, with HMRC and Companies House, and with your local council. An accountant can help you choose the right structure for your situation.
