How to Register a Business in the UK: The Essential Guide

Congratulations! You’ve decided to pursue your entrepreneurial aspirations. There’s a lengthy list of things on your to-do list, including registering your business as a legal entity.

Even part-time side hustles need to be registered. This is more than a mere formality, as it protects your business and provides you with a variety of benefits. So, it’s of top priority.

Let’s dive into how to register a business in the UK and a few other associated tasks that might not be on your radar.

Why Register Your UK Business?

If your business or side hustle is currently making £1,000 per year, or is expected to make more than £1,000 in the next calendar year, it needs to be registered as a business with Her Majesty’s Revenue & Customs (HMRC). This isn’t just for tax purposes.

Registering your business through all relevant channels provides:

1. Legal Protection: Registering your business as a limited company provides limited liability protection. This separates and protects your personal assets from being subject to debt. 
2. Legal Compliance: You can’t hire employees without registration. Depending on your industry, you may not be able to operate without registration and licensing. The fines for breaking these laws can be substantial. Enough to sink most startups before they begin.  
3. Credibility and Trust: Although we are in the day and age of the side hustle, many side hustles have turned into highly profitable businesses with multiple employees. You look more professional and build a higher level of trust with customers, vendors, and potential investors as a formal business entity. 
4. Access to Funding: Without registration, you can’t apply for most bank loans or government grants, and you won’t attract (or retain) the attention of most investors or venture capitalists. 
5. Tax Benefits: When you register a business in the UK, you’ll be assigned a Unique Taxpayer Reference (UTR) number. This 10-digit number allows you to claim qualified tax deductions. In addition, corporate tax rates are often more cost-effective than personal tax rates.
6. IP Protection: Once your business name is registered, you can apply to trademark your name. In addition to trademarking your name, it’s easier to protect most intellectual property with proper registration. 
7. Business Growth: Registration is required to qualify for most government contracts. It may be required for industry associations. If you want to partner with another business, they want peace of mind that you (and they) are legally protected. You might just be getting started, but you want to start off on the right foot. 
8. Succession or Exit Planning: Your business is an asset you may want to pass along. Your exit plan may not be anywhere in sight, but your business may be something you want to sell down the road. The sooner you register, the sooner you begin collecting measurable data that you’ll need when you want to sell your business. 

How to Choose a Name for Your UK Business?

Before you begin filling out any of your paperwork, you need to determine a unique business name. That said, before you get your heart set on the name you’ve selected or start printing marketing collateral—check to see if the name is available in the Companies House register. 

This is often easier said than done, which is why many startups seek a business advisor. It’s even more complicated if you plan to trademark your name in the UK or internationally.

How Much Does It Cost To Register a UK Business?

If your startup budget is tight, you’ll be pleased to learn that the cost of registration is quite modest. As of 2024, it costs £50 or £71 depending on the type of registration you require. There may be additional fees for expedited registration. Online registration typically takes 24 to 48 hours, while mailing your application in takes an average of 8 to 10 days. 

Applications can be found here. You’ll need to gather the information below for yourself and your shareholders or guarantors. 

• Town of birth
• Mother’s maiden name
• Father’s first name
• Telephone number
• National insurance number
• Passport number

How to Register a Business in the UK?

Before you can register a business in the UK or fill out the required paperwork, you must choose your business structure. 

With each of the structures below you are eligible to hire employees: 

• Sole Trader: This is a popular choice for small businesses and side hustles, but it doesn’t offer legal separation and protection. As you grow, you may transition to another business structure. 
• Partnership: If two or more people are founding partners of your business, this is the option for you. Registered partners share profits and tax responsibility. For legal separation, partnerships can be limited liability partnerships (LLP).  
• Limited Company: A limited company (Limited or Ltd.) is a separate legal entity that offers limited liability protection. This provides you with the most legal protection, as it legally separates your personal finances and contracts from your business finances.  

A business advisor can help you determine which structure is right for you.

Is That All I Need to Do to Ensure My Business Is Compliant?

The phrase “registering your business” is sometimes used as a blanket statement for completing all registrations, licenses, and permits required to operate your business. What your business needs varies by region, industry, income, and whether you’ll be hiring employees. 

You’ll also need to complete any combination of the following:

• Identify a unique name and register our business name.
• Set up a business bank account and UTC tax number.
• Acquire compliant business insurance. 
• Register for Value Added Tax once your annual revenues exceed £85,000.
• Obtain local area and industry-specific licenses and permits. 
• Set up Pay As You Earn (PAYE) for income tax and National Insurance. 
• Set up workplace pensions. 
• And more.

Need Help Registering Your Business?

As you can see, registering a business requires more time and attention than filling out a simple application or two. There are many decisions that need to be made ahead of time and different requirements that need to be met before you can legally operate your startup. The differences are nuanced and ever-evolving. 

As your business grows, your compliance requirements may evolve. As such, many startups optimise their time and ensure they get things right the first time around by working with an ActionCOACH business advisor. 

Speak to an advisor today and see how we can help you and your business. Alternatively, check out our learning center for more free business advice.