How To Register A Company In The UK?

How To Register A Company In The UK? How To Register A Company In The UK?

How To Register A Company In The UK?

11 November, 2019

There are various ways to set up your business and register a new UK company. Here we assess the pros and cons of each different company type you can set up, and give further advice on how to register a company in the UK within these broad setup formats.

What do I need to know before I register my company?

When you initially form a company, you’ll need to decide whether to launch as a sole trader, register as a limited company, or register with an umbrella company. This is an important step, and finding the right format for your business will ensure you operate in the most efficient way while saving money on tax.

In the following sections, we’ll address each of the three main options in turn, with additional notes on how/when to approach Companies House to set up a new business

Sole trader

Setting up as a sole trader is a suitable option for people who want to be the exclusive owner of their business, as this entitles them to all profits after tax. Typically, freelancers and contractors will set up as a sole trader.

Among the benefits of registering a sole trader, business are that it’s easy to set up initially with Companies House and HMRC since paperwork is minimal. There’s also the fact that it’s much easier to change your mind if you decide to go back into full-time employment later on.

However, sole traders don’t get as much tax relief as a limited company, and there’s also less access to finance should you need to take out a business loan. Additionally, sole traders don’t have the same level of protection as a limited company - therefore, if the business gets into debt, so will you.

How to register

If you want to register a new company in the UK as a sole trader, you’ll find the process to be extremely easy. You will need to register for Self Assessment and file a tax return every year. Registering for VAT is also required if your turnover is over £85,000 (you may also register voluntarily). If you’re setting up your business from overseas and plan to move to the UK, you must also apply for a National Insurance number.

You can trade under your own name, or choose something different. The trading/business name itself will not need to be registered with Companies House, giving you a bit more flexibility in terms of what name to pick. However trademark rules do still apply, so be sure to check the Trademark Register before finalising your decision.

Limited company

Ltd company formation is a suitable choice for businesses with at least one employee, or for contractors and freelancers earning over £30,000 per annum. This is chiefly because there are tax savings to be made by registering as a limited company.

Freelancers earning below that may also consider it an option to make a ltd company. However, to register a limited company you will have to deal with more paperwork, and there are some additional rules and guidelines to bear in mind when setting up. If you’re unsure whether this is the right move for you, get advice from your accountant.

One of the main benefits of going limited is being able to separate yourself from your business, giving you limited liability should things go wrong. For first time entrepreneurs going after major contracts, this is invaluable protection for you and your money. 

How to register

To set up a limited company, you will need to apply directly with Companies House or use a company formation service. Company formation services are beneficial because you can usually get some great deals. Our company formation partner, Crunch, offers its services for just £10 - and better yet, we can even give your £10 back in credit if you have a virtual office plan with us.

Forming your company is a lengthy process and you’ll need to have all the right information at hand. Check out our separate piece on the 7 important steps of setting up and registering your limited company in the UK. 

Umbrella company 

Registering with an umbrella company means that another business will be acting as an employer for you, who becomes the contractor. This type of registration will normally be done for a fee, and for a fixed term. Potential benefits of setting up this way include greater all-round flexibility, as well as easier access to guidance and advice as a new entrepreneur.

Registering with an umbrella organisation in this way saves you the trouble of setting up formally as your own limited company. For contractors unfamiliar with working for themselves (or who make less than £30,000 per annum), it allows you to dip your toes in the water to see if self-employment is likely to work for you longer-term.

It also completely frees you from several common business-running responsibilities such as VAT returns, company accounts, payroll, commercial software licensing, and so on. It can also be beneficial for short-term contractors who want to avoid the effort involved in registering a new limited company, knowing they’ll likely want to dissolve it later.

How to register

This is the easiest way to register a new company in the UK because you don’t actually have to form the company yourself first. Instead, you simply pick an umbrella company and contact them to register as one of their associated contractors.

Once you’ve been approved, you’ll inform your agency or end clients, check and sign the contract, send over your bank details for receiving payments, and start contracting. You’ll be trading under the umbrella company’s name, so choosing and registering your own brand name won’t be necessary.