How to start a business #5: Registering your business

No matter if you are a sole trader or a limited corporation, from cookies to crypto, everyone has to register their business. In fact, with the rise of freelancing and ecommerce sites, even those earning more than £1000 a year from their side hustle have to register with HMRC. But knowing this seems to leave many with more questions than they began with. Read on to find their answers…

What does it mean to register a business?

Registering a business in the UK means officially informing the government that your commercial activity exists. This essential process establishes your legal structure and ensures you meet your tax and legal obligations.

The Type of Registration Depends on Your Legal Structure

How you register and what it means for your business depends entirely on the structure you choose:

• Sole Trader: You simply register for Self-Assessment with HMRC. This tells the tax office you are self-employed. You are not a separate legal entity, meaning you remain personally liable for any business debts.
• Limited Company: You formally incorporate your business with Companies House. This makes the business a separate legal entity, providing you with “limited liability” to protect your personal assets. You will also need to register with HMRC for Corporation Tax.
• Partnership: If you are running a business with someone else, you typically register as a partnership with HMRC, though you can also register as a Limited Liability Partnership (LLP) through Companies House.

Why You Must Register

Registration is more than just paperwork; it secures your business operations, compliance, and long-term business growth:

• Tax Compliance: If you earn over £1,000 from self-employment in a tax year, you are legally required to register with HMRC to avoid fines.
• Legal Protection & Credibility: Registering a limited company protects your company name and separates personal liability from business risks.
• Business Operations: Registration is typically required to open a dedicated business bank account, register for VAT, or set up PAYE if you plan to employ staff.

How do I identify my business’s legal structure?

For an entrepreneur mapping out their path to business success, there are several distinct legal frameworks to consider. If you are still exploring options, you can read our previous guide on defining the legal structure.

• Sole Trader: The simplest structure where you are the exclusive owner of the business.
• Partnership: Ideal if two or more people are starting a small business together, sharing both the operational profits and the personal liabilities.
• Limited Company (Ltd): A separate legal entity where the business finances are entirely distinct from your personal finances.
• Limited Liability Partnership (LLP): Often chosen by professional services firms, this allows partners to share management duties while limiting their personal financial risk.

Whether you are a solo operator using professional virtual offices to establish a premium corporate presence or an expanding company looking for high-quality workshops or studios, matching your goals to the right structure is essential.

How long do I have to register my business?

The time you have to register your business depends entirely on your business structure:

• Sole Trader: You must register with HMRC for Self-Assessment by October 5th in your business’s second tax year. For example, if you start trading in the 2026/2027 tax year, you must register by October 5, 2027. You do not need to register if your turnover is under £1,000.
• Limited Company: You must incorporate with Companies House before you start trading. Once incorporated, you have 3 months to register the company for Corporation Tax with HMRC.

VAT Threshold

Regardless of your structure, if your taxable turnover exceeds £90,000 (or you expect it to in the next 30 days), you are legally required to register for VAT within 30 days.

How do I register my business?

You can officially set up your enterprise online:

• Register as a sole trader
• Set up a private limited company
• Set up a limited liability partnership
• Setting up a social enterprise

Securing your official registration is the first step toward building a successful enterprise. Once registered, many small businesses choose flexible business accommodation, such as the workspaces offered by Capital Space, to launch their operations without long-term risk. Our easy-in easy-out monthly licences ensure your business services and workspace can adapt as you grow.

Can I use Making Tax Digital without registering a business?

You cannot use Making Tax Digital (MTD) without being registered. To use MTD for income tax, you must already be registered for self-assessment and have submitted a tax return in the last two years. If MTD for VAT applies to you, your business must be VAT-registered first.

MTD is the government’s digital tax system designed for tracking and reporting business and property income. MTD does not change how you initially register your business. Registration remains a completely separate process. Instead, MTD changes how you manage and submit your tax records once you are already registered and operating.

Registering your business correctly from day one secures your legal compliance, protects your personal assets, and builds the credible corporate foundation required for long-term business success.

If you’re looking for office space from a provider that wants to support your business success, get in touch.