You legally have to register your business with the government (either with HMRC or Companies House) when you start trading (when the business starts selling or starts paying for things). It's best to get this step sorted sooner rather than later, as you might need to specific get documentation in place, and there might be penalties for registering late. You can find out how long you have for each type of business in the sections below.
You will probably register as a sole trader, limited company or - if you're founding a company with someone else - a partnership. You can find out which is right for you in our guide: Business formats explained: Should I register as a sole trader or a limited company?
HMRC advises you to register as a sole trader as soon as you can after you start trading. Technically, you have until 5 October after the end of your first tax year, otherwise, you could be charged a penalty.
The tax year ends 5 April, so if you started trading in January 2016, you'd have until October 5, 2017, to register. You have to register even if you already fill out a self-assessment tax return (which is how you pay your taxes as a sole trader).
Registration is simple and quick - normally no more than 15 minutes - and you can do it all on the HMRC website: Register with HMRC as a sole trader
Have your National Insurance ready, business details and personal details ready.
If you've previously been registered as a sole trader or business, use the government's guide on how to register as a sole trader.
You can find out all about how to register this type of business in our guide on how to register a partnership.
If you want to become a limited company, you have to take the plunge and register with Companies House. There are more than 2.7m limited companies in the UK and another 400,000 register every year.
You legally have to register as a limited company within three months of the date you start trading.
Registering with Companies House is the business end of creating a, er, business! It's a legal requirement put in place by the government if you want to start a limited business.
The standard registration fee for joining Companies House is £20. However, if like most entrepreneurs, you want your business to launch straight away, you can pay £50 for same day registration. The fastest way to incorporate a company is to file the application electronically, although paper application forms are available through the Companies House website.
Once you are registered with Companies House, your details will be passed onto HM Revenue & Customs. But you are also expected to contact your local HMRC office to let them know that your company exists. Make sure you do this, otherwise, you could face a penalty.
HMRC uses the information they receive from Companies House to set up a computer record for your company and allocates it a reference number known as a Unique Taxpayer Reference (UTR).
When registering you'll need at least one company director, whose name and address is stated in the company's Articles of Association and who is over 16 years of age. When registering online you'll need to create digital signatures for all directors, by detailing three pieces of personal information: first three letters of mother's maiden name, the town of birth, first three letters of eye colour.
When registering directly to Companies House you will need to fill in four forms: A Memorandum of Association, which explains the company's name, location and function; Articles of Association, which describe how it will be run; form 10 or the Statement of the First Directors, Secretary and Registered Office, which say where the company's registered office is and gives details of directors and their addresses, and form 12 or the Declaration of Compliance with the Requirements of the Companies Act, which shows the company meets all the legal requirements.
If you register online or with Smarta you'll still be submitting these forms, but lots of the other paperwork will be done for you.