bizSimple

The simple way to start a business.

Monday 6 February

“Although I can accept talking scarecrows, lions & great wizards of emerald cities, I find it hard to believe there is no paperwork involved when your house lands on a witch”

Dave James

Registering your business

Whether you decide to trade as a sole trader, partnership or limited company you will need to inform HM Revenue & Customs that you have set up a new business.

If you set up a limited company this is done automatically via the paperwork that you submit to Companies House when you register.

If you set up as a sole trader or a partnership you will need to notify HM Revenue & Customs yourself by completing a CWF1, which you can download from the HM Customs & Revenue website or contact their helpline on 08459 15 45 15.

You will also need to notify the Department of Social Security to ensure your National Insurance contributions are maintained.

You may also decide to purchase a franchise, in order to belong to a nationally recognised brand but this will still be classed as running your own business, so the same rules described above still apply to you.

FAQs

When do I need to register my business?

Some people register their business some time before they start trading, even if they set up a limited company. The latest you can register is when you finally start taking money for providing goods or services. If you are a sole trader or a partnership you must register within three months of starting or risk a penalty if you don't.

Can I change from one legal form to another?

Yes. Many people start off as a partnership or a sole trader and then move on to set up a limited company later as the business grows. It is more complicated to do it the other way round, but not impossible.

How do I decide which legal structure of business to choose?

Often a brief meeting with an accountant will help you to decide, but generally if you are setting up a very small business with profits of less than £30,000 per year and little business risk, choosing either the sole trader or partnership options will be the easiest and most sensible (depending upon how many people will be in the business).

The bizSimple Toolkit 02 looks at the advantages and disadvantages of each in more detail.