How to set up and register your business

You need to set up as a sole trader if any of the following apply: 

• You earned more than £1,000 from self-employment during the current tax year. 
• You need to prove you’re self-employed to claim Tax-Free Childcare. 
• You want to make voluntary Class 2 National Insurance payments to help you qualify for benefits.

You must tell HMRC that you’re a sole trader and that you’ll pay tax through Self Assessment. You’ll need to file a tax return every year by visiting Register for Self Assessment. 

As a sole trader, you’ll need to: 

• Keep records of your business’s sales and expenses 
• Send a Self Assessment tax return every year 
• Pay Income Tax on your profits and Class 2 and Class 4 National Insurance - use HMRC’s calculator to help you budget for this 
• Apply for a National Insurance number if you’re moving to the UK to set up a business 

You must register for VAT if your turnover is more than £90,000. You can register voluntarily if it suits your business, for example if you sell to other VAT-registered businesses and want to reclaim the VAT. 

Register with HMRC for the Construction Industry Scheme (CIS) if you’re working in the construction industry as a subcontractor or contractor. 

As a sole trader, you can trade under your own name or you can choose another name for your business.  

You do not need to register on Companies House but you must include your name and business name (if you decide to have one) on official paperwork, for example on invoices and letters. 

Sole trader names must not: 

• Include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’ 
• Be offensive 
• Be the same as an existing trade mark 
• Contain a ‘sensitive’ word or expression, or suggest a connection with government or local authorities, unless you get permission. 
• Use ‘Accredited’ in your company’s name - you need permission from the Department for Business, Energy and Industrial Strategy (BEIS). 

Check which words you need permission to use, and who from. 

You’ll need to register your name as a trademark if you want to stop people from trading under your business name. 

Each partner must be registered with HMRC for Self Assessment individually and each receive their own unique tax reference number (UTR).  

The partnership itself must also be registered for Self Assessment and will receive a UTR at. 

For more information on registering a partnership, visit GOV.UK. 

The nominated partner submits both the partnership return and their own self assessment form.  

The partnership return will require a ten-digit UTR number. It will also require the UTR numbers of all associated partners.  

An example tax return can be found here. 

Nominated partners must ensure enough financial information is given to the other partners so that they can submit their own self assessment returns. 

In most circumstances, a copy of the Partnership Statement will be enough to fill in the partnership pages of their personal return. Page 2 of the Partnership Tax Return Guide 2023 provides more information in this.  

You can complete your tax return using a paper form or by purchasing software that sends HMRC your personal Self Assessment tax return, Partnership tax return or your Trust and Estate tax return.

All businesses that file their VAT returns monthly or quarterly will have to use Making Tax Digital (MTD) compatible software to file future VAT returns unless exempt.

Paper form 

Software

For more information, you can contact the Self Assessment Helpline on 0300 200 3310. 

Limited by shares companies are usually businesses that make a profit. This means it:

• Is legally separate from the people who run it.
• Has separate finances from your personal ones.
• Has shares and shareholders.

Limited by guarantee companies are usually ‘not for profit’. This means it:

• Is legally separate from the people who run it.
• Has separate finances from your personal ones.
• Has guarantors and a ‘guaranteed amount’.
• Invests profits it makes back into the company.

You can register a private limited company online through the Companies House website. You can also use a company formation agent to complete this registration on your behalf: Set up a private limited company here. 

When registering your company, you'll need to register an official address and choose a SIC code - this identifies what your company does. 

Check the rules for company addresses. 

Check what your SIC code is. 

Register your company with Companies House. 

As a private limited company, you must choose a name for your business.  

Your name should end in ‘Limited’ or ‘Ltd’. If registering the company in Wales you can use the Welsh equivalents ‘Cyfyngedig’ and ‘Cyf’. 

You can check the rules for company names here and here.

You cannot choose the same name as another registered company. If your name is considered too similar to another registered company or trade mark, you may have to change it.  

Check if the name you want is available. 

Check existing trade marks. 

You must appoint a director if you are a public limited company, but you do not have to appoint a company secretary. 

Find out what directors are responsible for. 

Check who can be a director or company secretary. 

You need at least one shareholder or guarantor, who can be a director when establishing a private limited company. 

Check if you’ll need to issue shares or set a ‘guaranteed amount’ here.

You may get a dividend payment if you own shares in a company. You won't need to pay tax on a certain amount of your dividend income, but you will on the rest.  

For more information on how dividends from shares are taxed visit GOV.UK.

Anyone with voting rights or more than 25% of the shares is considered people with significant control (PSC) and you must register them as such. Find out who is considered and how to register them here. 

As a private limited company, when you register you will need to prepare documents agreeing how to run your company. These include:  

• Memorandum of association - a legal statement signed by all initial shareholders or guarantors agreeing to form the company 
• Articles of association - written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary 

Find out how to create a memorandum of association and articles of association here.

As a director of a private limited company, you’ll need to keep records about the business and its financial and accounting performance on an ongoing basis.  

You’ll find more information on what your responsibilities are here.

For details on the company and accounting records you must keep visit GOV.UK.