How to set up your business

Once you have chosen your business structure, you are faced with the task of setting it up. Every choice has consequences in respect of specific accounting and reporting requirements.

Brendon Christian

Reviewed by Brendon Christian of Christian. The Law Firm*

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What do I have to do to become a sole trader?


Choose a business name. As a sole trader you do not have to register a business name but you need to publicise a fixed point of contact so that people connect the business name with you in your capacity as a sole trader (eg a statement on your business stationery: "Mary Brown trading as 'Heaven Scent Cosmetics', 123 High Street ...etc").

As soon as you can after starting your business, you must
register for self-assessment with HMRC. If you register later than 5 October in the second year of your business, you may be charged a penalty.

For more information on your responsibilities as a sole trader, see our Quick Guide on running your business.

What do I have to do to set up a business partnership?

 

Choose a name for the partnership. For more information, see our Quick Guide on naming your business. As a business partnership you do not have to register a business name but you need to publicise a fixed point of contact so that people connect the business name with you in your capacity as a business partnership (eg a statement on your business stationery: John Smith and partners, 234 High Street ...etc”).

You must choose a ‘nominated partner’ who is responsible for administration and tax returns.

The nominated partner must register the partnership for self-assessment with HMRC via the Government Gateway.

The other partners must register for self-assessment with HMRC.

If you register later than 5 October in the second year of your business, you may be charged a penalty.


To be clear about your relationship with you partners, you can consider drawing up a partnership agreement.

For more information on your responsibilities on running a business partnership, see our Quick Guide on running your business.

 

What do I have to do to set up a limited company? 


Choose a company name.

You must register the company with Companies House. You can do this for £15 directly at Companies House using this form, or by using an agent.

You must give certain information to HMRC – for more information see here.  

For more information on your responsibilities on running a company, see our Quick Guide on running your business.

 

What do I have to do to set up an LLP?

 

Choose a name for the Limited Liability Partnership (LLP).

You must register the LLP at Companies House – for more information see here

It's also worth considering putting in place an LLP Agreement.

For more information on your responsibilities on running an LLP, see our Quick Guide on running your business.

 

How to decide on a structure?

 

This is all about considering the pros and cons. You should think about the following: 

  1. Should personal finances be separate from the business?

  1. Time spent on setting up a company or LLP and the additional administration involved

  1. Financial information about the business being public in the case of a limited company or LLP

  1. The more professional or established image if a business is a company or LLP which is registered and regulated by Companies House  


Tax issues


When deciding on the best route, you should also consider tax efficiency issues. 

The amount of tax paid and eligility for certain tax reliefs and grants will depend on your choices.

An accountant or tax advisor can help out and lead to savings over the long-term.

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