Before you start selling your first products or signing new clients, you’ll need to know how to register your business. There are a few different business structures to choose from when you start a business.
Which business structure is right for me?
Whether you register as a sole trader, partnership or limited company, they all have their own obligations when it comes to when and how to register your business. Business registry can be a confusing process, so to help ease that confusion, our experts from FSB Legal and Business Hub explain what you need to know.
How to register your business
Here are three common business structures and important things to think about.
Sole trader
If you’re running a low-risk small business from home, you’ll likely be registering as a sole trader with HMRC. Sole traders run their businesses as an individual and are self-employed. To register as a sole trader, you’ll need to tell HMRC that you pay tax through a Self Assessment.
You’ll need to keep records of your sales and expenses and submit a Self Assessment tax return every year. HMRC offers a calculator to help you budget for your tax payments as a sole trader. It’s also a good idea to open a business bank account to make managing your finances simpler.
You can keep all your business’ profits after you’ve paid all the relevant taxes and National Insurance, but you’ll have to manage your own taxes every year. New Making Tax Digital rules are already in force for VAT-registered businesses, and from April 2026 this will also apply to self-employed people with a turnover above £10,000.
We’ve created an in-depth guide to setting up as a sole trader which covers all the important information you need to know when you’re new to the world of working for yourself.
Partnership
In a partnership, you register with HMRC, however, you are also required to choose a nominated partner for the business.
The nominated partner is responsible for managing the partnership's tax returns and business records. The partners of a business split the profits between themselves and are responsible for paying their own tax on their share.
A partnership could ease some of the burden through each partner having their own skillset - creating a well-balanced team – or through providing a larger amount of financial support, which is sometimes known as a sleeping partner.
Find out more about setting up a partnership.
Limited company
Registering your business as a limited company can seem complex, but it doesn’t have to be. If you register a limited company, your business is a separate legal entity, and your personal and business assets are also separate. Because of that separation, you need to be registered with Companies House in addition to HMRC.
If you are also a shareholder in your company, you can choose to pay yourself a smaller salary but pay dividends from company profit. As dividends are taxed differently to salary, you may pay less tax overall. Another major benefit can be taken from the name: limited company. Broadly speaking, if any significant debt is incurred, or large claims made against your company, your personal assets are safe.
To set up your limited company, you’ll need to consider the following:
Your company name
Companies House has a company name availability checker that you can use when thinking about what name to register with. Don’t forget, you can use a different name than the one you use at registration. This is known as a trading name.
Registered address
Remember that your company address will be publicly available. If you want to keep your home address private, you might consider using the address of your accountant, for example.
Your Standard Industrial Classification (SIC) code
Your SIC code determines the nature of your business activity and a description of your trade. You can find a list of SIC codes on Companies House.
Appoint a named director
Your company will need at least one named director. They will be legally responsible for the business, for example organising company accounts.
Details of shares
All shareholders – even if there is just one – need to agree and sign a memorandum and articles of association, which states your agreement to run a business and sets out rules for how the company is run.
Register for Corporation Tax
You must do this within three months of starting to do business.
VAT considerations for all business structures
Whatever your business structure, if your business’s total turnover (subject to UK VAT at zero, reduced or standard rate) exceeds £85,000 in any rolling 12-month period (or in the next 30-days alone) you will need to register for VAT and submit a VAT returns. Some businesses benefit financially from being VAT registered and therefore choose to voluntarily register in advance of hitting the VAT threshold.
Making Tax Digital rules apply to VAT-registered businesses and impact how records are kept, figures prepared and returns submitted for VAT.
Choosing your name
You must try to choose a unique name. If you are not careful and tread on a pre-existing business’ toes, you could have legal claims bought against you both for money and to force you to change your name. Whilst there are various businesses in the UK with the same name (for example The Red Lion, A Cut Above, etc.) this is generally best avoided.
You need to do as much research as you possibly can into your name before proceeding with it. This includes but is not limited to extensive Google searches, Companies House searches (this can be done online), and Intellectual Property Office searches (again online).
Business names are protected by the law of passing off. This allows another business with the same or a similar name to bring legal action against you if what you are doing is causing or is likely to cause confusion.
Business logos are protected by the law of copyright. If your logo is the same or similar to somebody else’s you could be sued for copyright infringement.
You could consider obtaining a Trade Mark. It’s generally rare for a new start-up to do so, as it can be time-consuming, complicated, and expensive, plus it’s not really known at that point to what extent the name/logo will need protection over and above the laws of passing off and copyright.
Certain names are either not allowed by law or require prior approval. These are listed at Companies House and include things for example that suggest a connection to the government, or certain professions.