Key takeaways
- Sole traders register for Self Assessment with HMRC by 5 October following the tax year they started trading. There is no Companies House registration required, and the process is free.
- Limited companies must be incorporated at Companies House, which costs £12 online. You also need to register for corporation tax with HMRC within three months of starting to trade.
- Partnerships register with HMRC using form SA400. Each partner must also register individually for Self Assessment. A written partnership agreement is strongly recommended but not legally required.
- All business types must register for VAT if taxable turnover exceeds £90,000 in any rolling 12-month period.
Registering as a Sole Trader:
To register a business as a sole trader, you need to:
- Register as self-employed with HMRC
- Choose a business name
Sole Trader responsibilities
Once you’ve registered, you need to fulfil your responsibilities as a sole trader. These include:
- Keeping records of your sales and expenses
- Submitting a Self Assessment tax return each year
- Paying income tax and National Insurance Contributions
Registering as a Limited Company:
To set up a limited company, you need to:
- Decide what type of limited company you need
- Choose a business name
- Choose how to set up your limited company
- Complete the company formation process
- Open a business bank account
- Inform your stakeholders
- Get your VAT registration or transfer sorted out
- Set up your payroll
- Update your company details
- Get your books sorted out
Registering as a Business Partnership:
To set up a business partnership, you need to:
- Choose a business name
- Choose a ‘nominated partner’
- Register with HMRC
