How to Register a New Company in the UK: Terms, Required Documents and Tips to Follow

Do you want to start a business, but you’re wondering how to actually register a new company? 

There are various ways to set up your business and register a new UK company. 

In this article, we’re going to assess the pros and cons of each business structure, the documents you’ll need and the steps involved in registering a new company.

Which business structure should I use to register my company?

When you first register a company in the UK, you’ll need to decide on a suitable business structure.

This is one of the first decisions you’ll make as a business owner, and it’s important to get this right. Choosing the right structure will impact your tax efficiency, while also ensuring you’re operating in compliance with Companies House and HMRC regulations, as well government legislation.

For the purposes of this article, we’re going to focus on the two primary business structures most entrepreneurs will adopt: sole trader and limited company.

We’re also going to look at setting up an umbrella company, but the process is the same as registering a new limited company. The difference is how you work within that structure, rather than how it’s founded.

Business structure option 1: sole trader

A sole trader is a self-employed person that runs their business as an exclusive owner. If you choose this business structure, in effect you are the business. It’s not a separate legal entity, and this means you’re responsible for all of the business’s obligations and debts.

Business structure option 2: limited company

Unlike when you register as a sole trader, a limited company is a distinct legal business structure separate from the business owner. ‘Limited’ refers to the owner’s liability, meaning the business is responsible for debts, not the director(s).

Other business structures

There are two other common business structures you should be aware of: partnerships or a limited liability partnership (LLP).

A partnership works in the same way as a sole trader structure, with each partner sharing personal liability for the business’s debts. Each partner also has to pay their own income tax and National Insurance contributions via self-assessment.

LLPs were introduced by the UK government in 2001, designed to be a halfway point between partnerships and limited companies. They offer the organisational flexibility of a partnership, while they are also taxed like a partnership, but LLPs also limit the personal exposure to the business’s liability. Note that, like a limited company, LLPs must be incorporated with Companies House.

Registering as a sole trader

Registering as a sole trader is the simplest business structure as it only requires registration with HMRC for self-assessment — you do not have to register with Companies House.

Benefits

There are numerous benefits to setting yourself up as a sole trader, not least the speed and ease with which you can get started. Registration is also free, and you don’t even have to register for self-assessment before you start serving customers or clients, as long as you do so by 5th October following the conclusion of your first tax year (5th April).

What’s more, starting your business as a sole trader doesn’t prohibit you from registering a limited company further down the line,

Disadvantages

The main downside of being a sole trader is that there is unlimited liability for the business’s debts and financial obligations. This means that you are responsible for all money owed to customers, suppliers or governmental institutions, and your personal assets can be put up against them.

Being a sole trader also stops being the best option once you reach a certain income level, as it’s not as tax-efficient as being the director of a limited company. As a company director, you can take payment primarily in the form of dividends, which are taxed at a lower rate than regular income, particularly as your revenue moves into the Higher and Additional Rate tax brackets.

How to register

If you earn more than £1,000 from self-employment in a single tax year (6th April to 5th April) you must register for self-assessment.

The process to register as self-employed is simple, and takes just a few minutes to complete (if you’ve got all of the information you need):

Step 1: Gather the information — you’ll need your National Insurance number, while you’ll also need to provide some personal information.

Step 2: Sign up for a Government Gateway or GOV.UK One Login, and complete the self-assessment registration form.

Step 3: Receive your Unique Taxpayer Reference (UTR) — after completing the form, you’ll receive a 10-digit UTR number that you’ll need to access your tax account.

During registration, you’ll also have the option to provide a business name, although you can also trade under your own name.

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 you can pick. However, trademark rules do still apply, so be sure to check the Trademark Register before finalising your decision.

Registering a limited company

Although there’s more complexity involved when setting up a limited company, if doing so makes sense for you, there are a number of benefits that are worth taking advantage of. 

Benefits

Aside from limited liability, another benefit of setting up a limited company is that it can be more tax-efficient once you reach a certain income level. Typically, it will be more tax-efficient to set up a limited company once profits exceed £30,000 per year. However, bear in mind that the increased complexity of a limited company’s accounts might require you to work with a professional accountant, so you need to consider this annual cost when deciding on what makes most financial sense.

As you grow, you’ll also have additional opportunities to raise capital, as limited companies have the power to sell shares, with new investors buying a stake in the business.

Disadvantages

The main disadvantage of registering a company in the UK is the additional complexity, with more annual paperwork and accountancy work required to ensure you stay compliant with the law.

Registering a new business also costs money, but how much does it cost to create a limited company?

Direct online registration is £100, while you’ll also have to draft a Memorandum and Articles of Association, documents that outline your company’s structure and rules. These need to be accurate, so we recommend seeking legal advice, and fees can range from £100 to £200. You’ll also need to file a confirmation statement each year, which costs £50 when completed online.

How to register

To register a limited company you can do so directly with Companies House or use a company formation service.

However, if you choose to register the company yourself, you’ll follow these steps:

Step 1: Choose whether you’ll be limited by shares or guarantee — most companies are limited by shares, meaning you can raise investment by selling shares and that the company is owned by its shareholders. Companies limited by guarantee are usually non-profits or registered as charities.

Step 2: Choose directors and a company secretary.

Step 3: Decide who the shareholders are — your company will need at least one shareholder, who can also be a director.

Step 4: Identify people with significant control (PSC) — this is anyone with more than 25% of the shares or voting rights.

Step 5: Prepare documents agreeing how to run your company — this includes the memorandum of association, articles of association, statement of capital and statement of guarantee.

Step 6: Check what records you’ll need to keep — you’ll need to keep records about the company itself, as well as financial and accounting records.

Step 7: Choose your company name — this must follow certain rules around company names, as well as be available to use.

Step 8: Register your company to Companies House with an official address — this must be a genuine, physical location in the UK jurisdiction where you operate (i.e. England, Wales or Scotland). This can be an office address, but if you don’t have a dedicated office space, you should use a registered office address service to protect your privacy and enhance your professional credibility.

Umbrella company 

An umbrella company is a business that employs contractors, not full-time employees. Rather than setting up your own limited company or operating as a sole trader, you become an employee of the umbrella company.

How this works in practice is that the umbrella company signs a contract with a client, and you sign an employment contract with the umbrella company — even if you consider it to be your business. The client pays the umbrella company for the work you've completed, and the umbrella company then processes your pay through PAYE (Pay As You Earn), deducting Income Tax and National Insurance.

Although there are some benefits of working through an umbrella company if you’re a contractor, such as reduced admin and employment rights not available to sole traders, there’s not really any reason to set up your own umbrella company to then employ you. You won’t enjoy any of the tax efficiency benefits that comes with being a director of a limited company, but you will still have all of the admin of setting up the company.

Documents required to register a company in the UK

We’ve covered the process of registering a UK company, but let’s take a closer look at the documents you’ll need. 

IN01 FORM

The form is used by Companies House to register companies. In this form, you need to provide basic company information (its structure, name and address) and information on its director, shareholder and secretary (date of birth, name, and residential address). 

Articles of Association 

All directors and shareholders who register a UK company must sign the Articles of Association document. This document states your company's rules, legal responsibilities and the roles of all members. It's also possible to provide your own company rules in addition to the standard ones.  

Memorandum of Association 

In addition to the company’s name and registered office address, this document includes a statement regarding the liabilities of the company’s members and information on the share capital. 

How Hoxton Mix can help 

If you choose to register a new limited company you’re going to need to provide an office address, but if you’ve just started out, you probably won’t have dedicated office space. This means you’ll likely consider using your home address.

However, not only does this impact your professional credibility, but it also impacts your privacy, because a company’s address is publicly available information.

Fortunately, a virtual office address solves this problem, while also offering invaluable supporting services like mail handling and WhatsApp Business that can take your new business to the next level.

Our registered office address with AI-powered mail handling is available from less than £21 per month, with the option of a flexible contract that can be cancelled at any time — so what are you waiting for? Get started today and register your company with a Hoxton Mix registered office address.

FAQ

At what point do I have to register a business?

If you want to set up a limited company, you must register your business with Companies House and HMRC before you start selling any products or providing services in the UK. If you plan to operate as a sole trader, you must register for self-assessment by 5th October, following the end of the first tax year in which you earned income (5th April).

Do I need to register my small business UK?

No, you can operate as a sole trader that doesn’t require registration with Companies House. However, you will have to register for self-assessment with HMRC.

How do I register a company in the UK?

To register a company, you must follow the online registration process on the Companies House website. This includes choosing your directors and a company secretary, identifying people with significant control (PSC), preparing the required documents, choosing a company name and finally registering with an official address — ideally a registered office address service, rather than your home address.

What happens if you don't register your business?

Failing to register your business can result in fines, interest on unpaid taxes and unlimited personal liability. It may also lead to banking restrictions and a loss of professional credibility, or legal prosecution for failing to verify your identity with government agencies.