How to register your small business (2025)
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Posted: Tue 19th Nov 2024
Ready to start your own business? Before you tell the world, there are a few administrative tasks you need to take care of. One of the most important is registering your business with Companies House and HMRC.
This comprehensive guide for small business owners will:
help you choose the correct business structure
take you through the business registration process
tell you how to protect your intellectual property
Small business registration: The steps involved
Choose your company structure
Register with Companies House
Register with HMRC
Register for VAT
Work with an accountant (if you want to)
Protect your intellectual property
Register your home workspace
Step 1: Choose your company structure
The first step is to think about the type of business structure that best suits you.
Which one you choose will determine how much admin you have to do and the kinds of financial and accounting records you need to keep. It also affects whether you'll be liable if your company runs up any debt.
We've included some of the most common options below, but it's always good to take advice from a qualified accountant if you're not sure which company structure to choose.
Sole trader
This simply means that you work for yourself as a self-employed person. You'll keep accurate records and accounts of your activities and – since you're working alone – you'll keep all the profits.
However, because you and the company are one and the same in the eyes of the law, you have personal liability for any debts you run up as part of the business.
Read more:
Limited company
The main difference between a sole trader business and a limited company (private company) is that a limited company exists as a separate legal entity. That means that your business finances and personal finances remain separate, so you can't be held personally responsible for any business debts.
VIDEO: How to form a UK limited company
In this webinar, Nick Campion from 1st Formations takes you through the entire process of registering a UK limited company, step-by-step:
Need a physical address in the UK to use as your registered office address? Most 1st Formations packages include a registered office address service: Claim this offer
Partnership
If you want to be self-employed but team up with a co-founder, think about partnership status. In a business partnership (known as a limited liability partnership, or LLP), two or more people share the risks, costs and workload of starting a business.
Limited partnerships are a great way to combine skills and experience, plus it can be comforting to share your start-up journey with someone else. It's something that worked well for Susan Gafsen, co-founder of healthy snack brand Pep & Lekker:
"I co-founded the business with my sister-in-law Juliette, who's also a really good friend. We enjoy doing different things – I focus on customer relationships and business development and Juliette comes up with the recipes and product development. We make big decisions together, but get on with different tasks autonomously."
Read more:
Setting up a social enterprise
To start a social enterprise – a business that has a social or environmental mission – there are extra legal structures to think about. These include community interest companies (CICs) (CIC) and charities.
Read more:
Step 2: Register with Companies House
If you've chosen to set up your small business as a private limited company, you'll need to register it with Companies House. You can do this in any of the following ways:
Incorporate your company on the government's website. It costs £12 in registration fees and your company registration usually goes through within 24 hours.
Use a formation agent to register your company.
Register and file documents using third-party company filing software.
VIDEO: How to incorporate a small business in the UK
Watch this webinar for expert insight from Companies House into how to choose the right business structure and how to get registered:
You can check if your company name is available on Companies House using 1st Formations' company name checker: Claim this offer
Step 3: Register with HMRC
If you're setting up as a sole trader, you don't need to register the business with Companies House but you do need to register with HM Revenue & Customs (HMRC).
With other business structures (such as a limited company or limited liability partnership), you must go through HMRC's company registration process so you can make sure you're paying the correct taxes.
Registering your new business with HMRC is a fairly clear-cut process. However, your filing requirements will differ depending on which status – sole trader, limited company or partnership – you've chosen.
Sole trader
As a sole trader, the process of calculating how much income tax and National Insurance you must pay is done through Self Assessment. If you haven't filed a Self Assessment tax return before, here's how the process goes:
You register for Self Assessment online.
You'll receive a letter with your unique taxpayer reference (UTR) number within 10 days, which you'll need to file your annual tax return.
You'll then receive another letter with an activation code for your account.
Once you've registered, you'll be classified as self-employed. You'll then be able to submit tax returns that show your income and expenses from self-employment, as well as details of any employment elsewhere.
Deadlines for self assessment returns are as follows:
Paper returns: HMRC needs to receive these by 31 October.
Online tax returns: HMRC needs to receive these by 31 January.
Limited company
One of the biggest differences when registering a limited company is that you'll also need to set up and register a PAYE scheme. Since the company is a separate entity, you'll be considered an employee of that company.
As the owner of a limited company (i.e. a company director), you must complete a Self Assessment company tax return at the end of your accounting year. This should show the company's taxable profits and whether you owe any corporation tax.
You must also file the return with Companies House. This is a legal requirement, and you can do it free of charge through the Companies House WebFiling service.
While the filing deadlines for Self Assessment and partnership tax returns are fixed dates for everyone, this isn't the case for limited companies. You must file your company tax returns 12 months after the end of your company's corporation tax accounting period.
Partnership
When you set up a partnership, you need to choose a 'nominated partner'. The nominated partner will be responsible for:
registering the partnership for Self Assessment with HMRC
sending the tax returns to HMRC
keeping business records
The other partner (or partners) will need to register separately and send their own individual tax return, as well as a partnership supplementary page.
The deadlines for partnership tax returns are the same as sole trader returns:
Paper returns: HMRC needs to receive these by 31 October.
Online tax returns: HMRC needs to receive these by 31 January.
Make claiming business expenses easy
Remember that you can claim expenses in your tax return, like accountants' fees, travel expenses and costs of working from home.
It's easy to forget this in the day-to-day running of your business, but trust us – when you sit down to complete your return, you'll wish you spent more time keeping track of those little purchases.
Keep hold of receipts, bank statements, copies of customer invoices and, if you're starting your business from home, utility bills.
GOV.UK has some good advice on record-keeping. Alternatively, a lot of accounting and business banking apps now allow you to scan expense receipts on the spot.
Step 4: Register for VAT
If your business turns over more than £85,000 – or if you think your annual turnover will exceed that amount soon – you should also register the business for value-added tax (VAT).
This figure is the VAT threshold set by the government, and any business with a taxable turnover of more than £85,000 must register with HMRC.
Being VAT-registered can bring credibility to your business and make it more attractive to bigger clients. However, adding VAT to your invoices could make you more expensive than your competitors. You'll also need to file regular VAT returns every three months.
Your VAT returns record things like:
your total sales and purchases
the amount of VAT you owe
the amount of VAT you can reclaim
Step 5: Work with an accountant (if you want to)
You don't need to wait until your business reaches a certain size or gets more complicated to speak to an accountant.
A qualified accountant can help you decide what structure is best for your business and complete your tax returns for you. Even if your accounts are simple now, rules and regulations tend to change frequently and without warning, so it's good to have an accountant you trust in your network.
Read more:
Step 6: Protect your intellectual property
Once you've registered your business with Companies House and HMRC, your final consideration should be to protect your intellectual property rights. Having the right protection will help stop people stealing or copying things like your brand or the look of your product.
There are four kinds of intellectual property (IP) you can protect:
1. Patents
These protect inventions that make something work in a new or novel way. Their function might change what a product does or how it does it – for example, you could patent the chemical formula in a fizzy drink or the technology behind a new form of Bluetooth.
2. Trademarks
These are distinctive signs that distinguish goods or services in the marketplace. You could register any of the following as trademarks:
A name
A logo
A slogan
A colour theme
For example, Toblerone's distinctive triangle shape and Nike's 'Just do it' slogan are both trademarked.
3. Designs
A registered design protects the overall visual appearance of a logo or product. This includes the physical shape, configuration (how different parts are arranged) and decoration (like a pattern on a product).
Apple iPhones and Coca-Cola bottles are both registered designs.
4. Copyright
Copyright protects literary or artistic works, like books, films and photographs. It's an automatic right for anything that's written or recorded, so the copyright holder is usually the first creator or author.
That said, there is a grey area if you produced something while working elsewhere – an employer could claim ownership.
You can register and protect your IP by visiting the Intellectual Property Office website.
In this Lunch and Learn, chartered trademark attorney Laura West explains why your brand's intellectual property (IP) is so important:
Step 7: Register a home workspace
So you've registered your small business and made sure your intellectual property is protected – breathe a sigh of relief!
The next step is to take care of your workspace. Most people start their businesses from home – it's the cheapest and easiest option after all. You can meet important clients in a café or local co-working space, and outsource work to remote freelancers.
Jason Nichols, founder of New Kings Coffee, opted to work from home when he started his innovative coffee-in-a-bag business:
"I sell products and, luckily, I have the space at home to store them, so I can fulfil orders and work from there. It's cheaper at this stage of my business, as I'm not holding enough stock yet to justify paying for more space."
However, there are a few questions that commonly get asked about starting up at home. Do you need to register your home as the official workspace for your business? Do you need to tell your landlord? Here are the answers.
Do I need planning permission?
You'll only need planning permission if:
you'll no longer use your home primarily as a private residence
your business will create a significant increase in traffic or people in the area
your business will involve activities that are unusual for a residential area
your business will disturb neighbours at unreasonable hours
In short, if you're going to be running your business quietly from a room, and your house will pretty much remain a house, you won't need planning permission. If you aren't sure, you can contact your local council to check.
Do I need to tell the local authority I'm working from home?
If you need planning permission, you'll need to inform your local authority. If you don't, you won't.
As a home-based business, you'll be covered by small business rate relief too. That means there's no need to pay rates on the part of the house you're using as an office unless you've converted it into business premises (for example, if you've set up a shop in your spare room).
Does my insurance provider need to know too?
Yes, it's best to inform your insurance company. An upgrade from domestic to business policy usually isn't expensive, and it's important to make sure you're protecting business-critical equipment like a laptop.
Your insurance provider should also be able to recommend appropriate insurance options for your business, like public liability insurance which will protect you if a visitor injures themselves.
Read more:
Should I tell my neighbours?
It's always best to keep your neighbours onside. An unusual number of deliveries or visitors will inevitably draw attention, so let them know in advance that you'll be working from home.
If you think there might be some disruption for them, perhaps send a bottle of wine or box of chocolates to compensate!
Read other guides in our Essentials series