Setting up a new business is an exciting process. For entrepreneurs dreaming of selling a new product or providing an innovative service, there are several steps they must take in order to lawfully register their business.

When setting a business, owners must first choose the structure of their new company. The structure of the company will affect how the business is registered and how it operates. Businesses are generally categorised as a sole trader, a limited company, or a business partnership. Sole traders are self-employed owners, while limited companies must have a registered office and at least one director in the UK. A business partnership is where partners share responsibility for running a company.

To register a business in the UK, a sole trader who is the only owner of the company and either works alone or employs staff must register for self-assessment tax with HM Revenue and Customs (HMRC). This means the owner or his/her accountant will calculate the applicable tax. Sole traders must have a National Insurance (NI) number. Sole traders can trade under their own name or choose a business name.

To set up a limited company, owners must appoint at least one director to run the company. There must also be at least one shareholder. Owners must also register the company with Companies House. This process is also known as incorporating a business. The company must have a name and an address, as well as articles of association that set out rules for running the company. Owners must also ensure that the company is registered for Corporation Tax with HMRC.

To register a business partnership, the company must be registered for self-assessment tax with HMRC. Although the business can be run by an individual, profits are shared between partners. A partner is typically nominated to represent the business as well as manage tax returns and financial records. The partnership must also register with Companies House. The name of the partnership must also comply with certain rules, such as including LLP for a limited liability partnership, LP for a limited partnership and Ltd for a private limited company.

If an overseas company wishes to carry our business in the UK, the company must also register with Companies House. In order to register, a company must register with Companies House within a month of starting operations in the UK. A UK address is also needed to register an overseas business in the UK. Before registering in the UK, overseas companies should contact UK Trade and Investment for advice and information about operating in the UK.

Once registered, there are other important steps a company must take to ensure they are operating legally. Depending on what they do, business must apply for a licence for specific activities. For example, a business that carries out food operations must register as a food business while a business that serves alcohol must also apply for a licence to sell alcohol. New businesses must also set up a dedicated bank account. If a business deducts NI contributions from employee salaries or if self-employed individuals pay NI contributions, the business must register for VAT with HMRC if the business turnover is more than £81,000.

There are a range of programs and services to help new businesses, including support for starting a business and obtaining business financing. Additional information about setting up a new business may be found online at www.gov.uk/browse/business/setting-up/.

Sources:

http://www.ukti.gov.uk/

http://www.gov.uk/licence-finder

http://www.gov.uk/vat-registration

http://www.gov.uk/choose-company-name

http://www.gov.uk/register-for-self-assessment

http://www.gov.uk/business-finance-support-finder

http://www.gov.uk/apply-national-insruance-number

https://www.gov.uk/government/organisations/companies-house