By Sarah Johnson · Last updated 2026-06-08
Choosing the Right Business Structure
Before you register, the most important decision you will make is choosing your legal structure. This affects how much tax you pay, your personal liability, how you raise money, and how you are perceived by clients and suppliers. The four main options in the UK are sole trader, limited company, partnership, and limited liability partnership (LLP).
Sole Trader
A sole trader is the simplest and most common structure for new businesses. You are the business — there is no legal separation between you and your company. Setup is quick and free, but you are personally liable for all business debts. If your business fails owing money, creditors can pursue your personal assets including your home.
Who it suits: Freelancers, consultants, tradespeople, and anyone starting out who wants simplicity and low administrative burden.
Key facts:
• No registration fee — you simply notify HMRC
• You keep all profits after tax
• You pay Income Tax and National Insurance on profits via Self Assessment
• Personal liability is unlimited
• Less credible to some larger clients and suppliers
• Harder to raise investment
Limited Company (Ltd)
A private limited company is a separate legal entity from its owners (shareholders) and directors. The company can own assets, enter contracts, and incur debts in its own name. Shareholders' liability is limited to the value of their shares — your personal assets are protected.
Who it suits: Anyone expecting significant profits, wanting to protect personal assets, planning to raise investment, or wanting to appear more professional to corporate clients.
Key facts:
• Companies House incorporation fees checked 2 July 2026: £100 online or through software, £124 by paper; same-day incorporation is £156 through software only. Companies House fees
• Pay Corporation Tax on profits (19% on profits up to £50,000; 25% on profits above £250,000; marginal relief between)
• Directors can take a salary + dividends — often more tax-efficient than sole trader above £30,000 profit
• Must file annual accounts and a confirmation statement with Companies House each year
• More administrative burden but greater credibility and asset protection
• Can issue shares to investors
Partnership
A general partnership is where two or more people run a business together and share profits, losses, and liability. Like a sole trader, there is no legal separation — each partner is personally liable for the partnership's debts, including debts incurred by the other partners.
Who it suits: Two or more people starting a business together who want simplicity and are comfortable with shared liability.
Key facts:
• Register the partnership with HMRC (the nominated partner registers)
• Each partner files their own Self Assessment tax return
• A written partnership agreement is strongly recommended
• Unlimited personal liability for all partners
Limited Liability Partnership (LLP)
An LLP combines the flexibility of a partnership with the limited liability protection of a limited company. Members' liability is limited to their investment in the business.
Who it suits: Professional services firms (solicitors, accountants, architects) where partners want liability protection but prefer partnership flexibility.
Key facts:
• Register with Companies House (LLP incorporation: £100 through software or £124 by paper; same-day software filing is £156, checked 2 July 2026)
• Must have at least two designated members
• File annual accounts and confirmation statements
• Members pay Income Tax on their share of profits via Self Assessment
Registering as a Sole Trader
Registering as a sole trader is straightforward. You must register with HMRC by 5 October in your second year of trading — but register as soon as you start to avoid penalties.
Step-by-step process:
1. Go to gov.uk and search "register for Self Assessment"
2. Create a Government Gateway account if you do not have one
3. Complete the online registration form — it takes about 10 minutes
4. HMRC will send your Unique Taxpayer Reference (UTR) by post within 10 working days
5. Activate your online account and set up your Self Assessment profile
6. Consider registering for VAT if your turnover will exceed £90,000 (the current threshold as of 2024)
What you need:
• National Insurance number
• Date of birth
• Home address
• Phone number and email address
• Details of your business activity
Registering a Limited Company
Registering a limited company is done through Companies House. The incorporation fee is £100 online or through software, or £124 by paper; same-day incorporation costs £156 through software only. These fees were checked against the Companies House fee table on 2 July 2026. Processing times should be checked with Companies House before applying.
Tide company registration: £14.99 compared with the £100 Companies House fee
Tide currently advertises a £14.99 stand-alone company-registration service, compared with the £100 online or software incorporation fee published by Companies House. Tide says the £14.99 option includes incorporation, a Certificate of Incorporation and a free Tide business account with PAYE registration. Its page states that it accepts single shareholders and requires applicants to meet its eligibility and identity-verification checks. This is a commercial option rather than the official filing service, so compare the active Tide terms, what is included and whether the formation route fits your ownership structure before applying. See Tide's current company-registration terms and the Companies House fee table.
For the next setup decisions, use the [Startup Cost Calculator](/tools/startup-cost/), compare [business bank account options](/compare/business-bank-accounts/), and work through the [UK business tax guide](/guides/tax-obligations/).
Step-by-step process:
1. Choose a company name — Check availability on the Companies House name checker. Your name must be unique, not offensive, and not imply a connection with government. It must end in "Limited" or "Ltd".
2. Prepare your registered address — This is the official address for legal correspondence. It must be in the same country as your company is registered (England & Wales, Scotland, or Northern Ireland). It can be your home address or a registered office service.
3. Appoint directors — You need at least one director. Directors must be 16 or over and not disqualified. You will need their full name, date of birth, nationality, and service address.
4. Issue shares — Decide how many shares to issue and to whom. Most small companies start with 100 shares at £1 each. The shareholder structure determines who owns the company and in what proportion.
5. Prepare your Memorandum and Articles of Association — The Memorandum confirms the founders' intention to form the company. The Articles govern how the company is run. You can use the standard "Model Articles" provided by Companies House, which is suitable for most small businesses.
6. Register with Companies House — Use the official online service or an approved software provider. The incorporation fee is £100 online or through software, checked 2 July 2026. Check the current fee table before applying.
7. Receive your Certificate of Incorporation — This confirms your company exists as a legal entity. You will receive your company number, which you must display on all business correspondence.
8. Register for Corporation Tax — You must register with HMRC within 3 months of starting to trade. Do this via your Government Gateway account.
9. Set up clear company-money separation — A dedicated business account is usually the simplest practical route and is commonly required by providers, but UK company law does not generally mandate an account product labelled “business bank account”. Keep accurate company records and do not mix company and personal money.
10. Register for PAYE if you will pay yourself a salary — Even if you are the only director/employee.
After Registration: Key Ongoing Obligations
Sole Trader
• File a Self Assessment tax return by 31 January each year
• Pay Income Tax and National Insurance on profits
• Keep records of all income and expenses for at least 5 years
• Register for VAT if turnover exceeds £90,000
Limited Company
• File annual accounts with Companies House (within 9 months of your financial year end)
• File a confirmation statement with Companies House (annually; £50 online or through software and £110 by paper, checked 2 July 2026)
• File a Corporation Tax return with HMRC (within 12 months of your accounting period end)
• Pay Corporation Tax (within 9 months and 1 day of your accounting period end)
• Maintain a register of people with significant control (PSC register)
• Keep statutory books and records
Choosing a Business Name
Your business name is important for branding and legal reasons. Key rules:
• Sole trader: You can trade under your own name or a business name. If using a business name, it must not be the same as or too similar to a registered trademark, and must not include "limited", "Ltd", "LLP" or similar restricted words.
• Limited company: Must be unique on the Companies House register, must not be offensive, and must not imply a connection with government or a professional body without permission.
• Trademarks: Registering your company name does not protect it as a trademark. If your brand is important, consider registering a trademark with the Intellectual Property Office (IPO). A UK trademark costs £170 for one class of goods/services.
Registered Office Address
Every limited company and LLP must have a registered office address. This is publicly visible on the Companies House register. If you work from home and do not want your home address on public record, you can use:
• A registered office service (typically £50–£100/year)
• Your accountant's address (many accountants offer this)
• A virtual office service
Common Mistakes to Avoid
• Starting to trade before registering — You can incur penalties for late registration with HMRC
• Choosing the wrong structure — Switching later is possible but involves paperwork and potential tax costs
• Using a name that infringes a trademark — Check the IPO trademark register before committing to a name
• Not opening a separate business bank account — Mixing personal and business finances creates accounting and tax complications
• Missing the Corporation Tax registration deadline — You must register within 3 months of starting to trade
Frequently asked questions
How long does it take to register a limited company?
Companies House lists an incorporation fee of £100 online or through software and £124 by paper, with same-day incorporation available for £156 through software only. The fee table was checked on 2 July 2026. Check the current Companies House service before applying because processing times and fees can change.
What is the difference between a director and a shareholder?
A director manages the day-to-day running of the company and has legal responsibilities (filing accounts, acting in the company's best interests). A shareholder owns a portion of the company through shares and receives dividends. In small companies, the same person is often both the sole director and sole shareholder.
Can I change my business structure later?
Yes. Many businesses start as sole traders and later incorporate as limited companies as they grow. The process involves transferring assets and contracts to the new company, and there may be tax implications. It is best done with the help of an accountant. Changing from a limited company back to a sole trader is more complex.
Do I need a solicitor or accountant to register?
No — you can register a sole trader or limited company yourself online without professional help. However, an accountant can advise on the best structure for your situation and help you set up correctly from the start. Many accountants offer a company formation service for £50–£150 including their advice.
What is a UTR number and when do I need it?
A Unique Taxpayer Reference (UTR) is a 10-digit number issued by HMRC to identify you for tax purposes. You need it to file Self Assessment tax returns. HMRC sends it by post after you register for Self Assessment. It can take up to 10 working days to arrive, so register early.
Is my home address made public if I register a limited company?
Your registered office address is publicly visible on the Companies House register. If you use your home address as the registered office, it will be public. To keep your home address private, use a registered office service, your accountant's address, or a virtual office. Note that your home address may still appear on the register if you previously used it — you can apply to suppress it.