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How do I register a new business?

  • Blog
  • 22 March 2017

There are a variety of different types of business you choose to start, each with their own advantages and disadvantages. Similarly, they each come with their own obligations when it comes to when and how to register your business.

Business registry can be a confusing process, to help ease that confusion we’ve looked at the different types of business and how you register them.

How do I register a new business?

Sole Trader

If you are running a small business from home, you will likely register your business one of two ways: as a sole trader, or a partnership. The registry for these types of business are very similar.

All that you need to do as a sole trader is register with HMRC. This registers your business but also binds you to certain responsibilities such as managing your own tax and submitting a VAT return if your turnover exceeds £83,000.

The main benefit to registering as a sole trader is the simplicity. Once you have informed HMRC, you are ready to begin trading. However, your personal assets are unsecured through this route, meaning that any debt or claims made against you may be settled from your own pocket.

Partnership

In a partnership, you register with the HMRC, however you are also required to choose a nominated partner for the business.

The nominated partner is responsible for managing the partnerships 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 burdens through each partner having their own skillset - creating a well-balanced team – or through providing a larger amount of financial support, which is known as a sleeping partner.

LLC

To register your business as a Limited Liability Company is slightly more complex.  If you open an LLC, your business is a separate legal entity, and your personal and business assets are also separate. Because of that separation, you must register your business with Companies House alongside registering with HMRC.

The additional information you will need to register as an LLC is:

  • At least one named director of your business 
  • Details of shares, and at least one shareholder.
  • Your SIC code which determines the nature of your business.

All shareholders – even if there is just one – need to write and sign a memorandum and articles of association, which state your agreement to run a business and sets out rules for how the company is run. The final step is to register for corporation tax within three months of starting your business.

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 will pay less tax overall. The second major benefit can be taken from the name: limited liability. If any significant debt is incurred, or large claims made against you, your personal assets are safe.

How can FSB help with my business registry?

There are a many aspects to consider when it comes to what style of business suits you best, and it is certainly a topic you want to give due consideration to.

FSB Business Creation provides people looking to establish their own business access to a range of services designed to help and support new start-ups. This includes help with the process of business registry and company formation.

FSB Business Creation also includes access to:

  • A dedicated help and advice line
  • Insurance services
  • Payment services
  • Networking support

To find out more about how you could benefit from FSB Business Creation get in touch with a member of the team or visit our FSB Business Creation page.