17 October, 2022
Starting a new business always comes with many responsibilities and obligations. As a business owner in the UK, you will need to prepare a considerable amount of documents and carry out various registrations. You must fully comply with all requirements of British law, represented by HMRC and Companies House.
So, the obvious question is, “do I need to register my business?”. In most cases, it is a must, but even if it is optional, registration allows your business ownership to get many benefits and more freedom. Anyway, it is critical to understand what is expected of you as a business owner in the United Kingdom.
This article discusses everything you need to know about registering a business in the UK. Do I need to register my business in the UK? Why should I do this? When do I need to register my business? Keep reading to find out the answers to all these questions and more.
Every new business in the United Kingdom is subject to mandatory registration with HMRC. In fact, registering a business means informing the tax office that your business exists and paying all the necessary taxes provided by UK law.
Registering a business is required for different reasons, but the first and foremost purpose is to prevent any kind of problem with HMRC. Non-registration and non-payment of necessary taxes can result in hefty fines.
Another reason why you should register your business is specific trade activities. For example, selling alcohol or working as a street vendor requires a special license. Only its presence allows your business to work legally in the UK.
In addition, if your business involves hiring employees, you must register as an employer with HMRC. Employer’s liability insurance is also required. This is a prerequisite for any enterprise that has at least one employee on its staff.
Moreover, if you are wondering, “why do I need to register my business” there are many other reasons to register it as a limited company with Companies House. For example, if we are talking about creating a brand, then registration will protect the trade name. In addition, this type of business operation minimizes your personal financial responsibility as a business owner.
Every business must be registered appropriately when the income exceeds £1,000 per tax year. If your income is lower, you can choose the trading income allowance option. Thus, business owners in the United Kingdom can earn up to £1,000 without informing HMRC and declaring their turnover.
The important point is that this limit is about income, not profit. However, using the trading income allowance is not always optimal and beneficial from a tax point of view. This means that you, as a business owner, must ensure that this option is right for you. Remember that you can register with HMRC regardless of your business income.
Another essential registration is registration with Companies House. And the issue of its necessity is relevant for all business owners in the UK. The Companies House is the agency that directly maintains the official register of businesses in the United Kingdom. It keeps a record of all registered organizations and provides access to data about them. Thus, the answer to the question “do I need to register my business with Companies House?” is definitely yes. The presence in the Companies House gives the business a certain sense of reliability and respectability.
But when do you have to register a business? If your company operates as a partnership or as individual entrepreneurship, registration with Companies House is not mandatory for you. And if you intend to work as a limited enterprise or limited liability partnership, you must register with Companies House. Only then will you be able to trade legally.
And in case individual entrepreneurs want to register their business with Companies House, they will need to change the structure of the business and move to a limited liability company.
Registering a business with Companies House is a prerequisite for complying with the requirements of legislation in the United Kingdom. Answering the question, "do I need to register my business before I start" keep in mind that this must be done before the organization starts running.
The only way to get around this obligation, as we have already mentioned, is not to exceed the income of £1,000 per tax year. Compliance with this level of turnover allows the absence of a declaration of income. In all other cases, provided that your income is above the specified amount, declaration of it to HMRC is a must.
The need to register a business is not optional, but mandatory. If the registration and income declaration requirements are not met, your business may be subject to a significant fine, and you may be held liable for non-payment of taxes.
Remember that registering a business with Companies House (for limited enterprises and limited liability partnerships) and declaring income (if it exceeds £1,000) is a UK law requirement.
So, in general, any business in the UK must be registered if a trade or professional activity is carried out, goods or services are bought or sold, income and profit are generated, and interest is earned. All this indicates that you are not doing a hobby, but a business.
When answering the question, “do I need to register my small business in the UK” it is important to understand what you call a small business. It is one that has less than 50 employees and an annual turnover of fewer than 10 million euros.
Most often, small businesses are registered in the form of sole traders. In this case, the only thing you need is a national insurance number. The owners of such a business receive all profits after taxes but are fully responsible for all business processes. The sole trader registration in the UK provides for the establishment of business owners as self-employed and the payment of all taxes.
In addition, the choice of a sole trader structure for a small business is also more optimal because it is easier to transform a sole trader into a limited liability company than the other way around.
We at Hoxton Mix offer a full range of advanced business registration services in the United Kingdom. Our team helps businesses of any type and with any structure to carry out all the necessary registration processes in Companies House and declaration of income in HMRC according to UK law.
We will help you, as business owners, avoid paying fines, liability, and other serious consequences for the late registration of a business and non-payment of taxes. Entrust us with registration and declaration so you can avoid stress and focus on more critical business processes.
Carry out your business activities in the UK completely legally with Hoxton Mix. We register companies and provide a variety of other leading services for businesses in the United Kingdom.
Should you register your business? Contact us to learn more.
Read our other articles — free company formation, benefits of a virtual office, disadvantages of using a home address for business in the UK.
Do all businesses need to be registered?
To answer the question, “do I have to register my business?” it is important to clarify that enterprises in the UK need to be legally recognised and registered with the relevant authorities. Every business owner should register with HMRC and declare income if the turnover is more than £1,000 in a tax year. Also, the business must be registered with the Companies House. This is a prerequisite for businesses of all types except partnerships and sole proprietorships.
Can you run a business without registering it in the UK?
No, you can’t. If your business falls under the terms of the required registration, you must comply with them. The procedure for registering an enterprise and declaring its income is a prerequisite for the operation of the organization and trade. This is subject to United Kingdom law.
What happens if you don't register your business in the UK?
Failure to comply with registration and declaration requirements can lead to serious business consequences. A large fine can be imposed on the enterprise, and its owner can be held liable for non-payment of taxes. To avoid this, choose a trusted and reliable company formation partner.