You have a legal obligation to register your business. But when do you need to do this, and how do you do it?
Whether you’re just starting out, or you’ve been running a business for a short while already, this post will show you how to meet the legal requirements.
When To Register as Self-Employed
To begin with, you might need to register as self-employed. When should you do this? As soon as possible – ideally from the moment you start doing any sort of work for yourself. You can read our guide to registering as self-employed.
What Type of Business Should I Register?
First, you need to decide just what sort of business you’re running, as this will determine the criteria for when you need to register.
Beyond this, you can register as a sole trader, a limited company, or a partnership. Here’s the criteria for when you should register as each:
- Sole Trader. You need to register as a sole trader when you’ve earned more than £1,000 from your self-employed work in a tax year. You can read our full guide to registering as a sole trader here.
- Limited Company. Register as a sole trader and you’ll be personally responsible for all of your business’s debts. But register as a limited company and your business finances will be separate from your personal finances. Yet this isn’t the only criteria for registering as a limited company. For more information, check the government’s online advice hub.
- Partnership. If two or more people are running your business together, you’ll have to register as a partnership. Once more, you’ll find a detailed guide to what constitutes a partnership, and when you should register, on the government’s site.
When Should I Register My Business?
Ideally, you should register within a month of becoming active. But you should aim to register no later than six months before the beginning of the next tax year. As each tax year starts in April, if you become active in September, you should register your business by October.
Technically, there are no clear guidelines concerning timeframes or time limits. But the sooner you do it, the better. Leave things too late, and you could get a fine, or even a costly HMRC investigation.
When did your business become active? By “active” we mean, when did you first carry out any professional business activity? Because you should aim to register your business as soon as possible from the moment you become active.
What Are The Benefits to Registering My Business?
Once you register your business, you’ll take on certain financial responsibilities. You’ll have to keep detailed accounts, and you’ll have to submit a tax return every year.
But there are also many benefits to registering your business. Let’s explore a few of them:
- Credibility and Trust. When you’re just starting out, registering your business will send a strong message to potential customers: That you’re serious, you’re here to stay, you know what you’re doing, and you’re trustworthy.
- Security. Register as a limited company and your business finances and personal finances will always be separate. That way, even if your business faces significant losses, you’ll at least be able to rest assured that your business assets will be safe.
- Tax Benefits. Register your business and you could benefit from insurance premium deductions, income splitting schemes, deferred payments, and tax credit schemes.
Registering Your Business – Other Things to Consider
- You’ll need to set up a business bank account. Some banks charge a fee for this, but they offer many benefits and incentives in exchange. Read our complete guide to business bank accounts.
- Once your annual revenue exceeds a certain amount, you’ll have to register for VAT. You can read our complete guide to registering for VAT.
- You’ll have to keep detailed financial records and submit a tax return each year. You can read our guide to managing your tax records.
- Finally, you’ll need to get some business insurance to help you manage the many risks of running a business. You can read our guide to the various types of business insurance, and what they cover.
At Tapoly, we specialise in bespoke insurance for small businesses, with cover starting at just 50p a day.
If you have any questions, or you’d like to discuss your options, you can contact the Tapoly team at firstname.lastname@example.org. You can also call our helpline on +44(0)207 846 0108, or you can use our website chat function.