Recently decided to start a new business in London as a sole trader? But, do you know all the formalities you need to do before starting the same?
Do you have any idea how to register a sole trader business in the UK? For your information, the entire process of registration before sole trading is a straightforward one.
There’s no maze in it. Following each step of the process carefully and paying attention to detail are the keys to completing the process.
Doing it will keep your business legitimate and going. Wondering, what are the steps that you need to pass through before reaching your ultimate goal?
Here we are informing you about them along with the eligibility criteria for sole trading. Also, we are going to tell you about the relevant authorities before whom you may need to approach.
So, just keep reading…here we go…
Sole Trader in London – An Overview:
Want to delve into the topic, of how to register a sole trader business UK? Before doing it, let’s know who a sole trader is! A sole trader is a person who wants to open a new business by himself.
He also runs the business solely by himself. He never agrees with other people to take care of his business and be his partner in it.
On the contrary, a sole trader handles unlimited personal liability for running the business. His single ownership of the business saves him from getting controlled by someone else.
He gets flexibility in business-related operations. Also, the tax obligations on such people never remain very complex.
A sole trader may be a self-employed person. Also, he may be a working employee of any other company. However, for being a sole trader, you have to build up a business of your own.
There will be no boss in the business except you. Whatever work a sole trader does, he does it for himself. Sole trade doesn’t mean owning a limited company. Also, it doesn’t mean making a partnership with other companies.
In a sole trader business, the businessman works all alone. So, he only earns for himself. There is no partner with whom he has to divide his business profits.
Setting Up A Sole Trader Business – The Entire Process:
Don’t know how to register a sole trader business in the UK? Well! For that, you need to arrange the important documents and go through all the necessary formalities all by yourself.
These documents are needed so that you can register yourself as a sole trader. Here’s how you should proceed for the same –
How To Register A Sole Trader Business in London – Step-By-Step Illustrations:
1. Choose A Perfect Name For Your Company:
Business is done better when it’s done under the name of a company. Each company’s name is unique. So, you have to choose a unique name for your business.
Also, the name must indicate the type of business you want to do. Wondering how to register a sole trader business in London with a unique business name?
Don’t know how to check the uniqueness of your chosen business name?
You can use the UK Government’s business name checker tool for it. Now, what if you find any other company with the same name that you’ve chosen for your company?
Consider changing your chosen business name and inventing a different one.
Also, avoid using trademarks that are already existing for your business. After you’re done with finding a unique business name, go for giving your business an online presence.
To do it, register your business with a domain name.
2. Register Your Business With HMRC:
Paying the required HM revenue and customs taxes is important to keep your business running successfully. And, to make it happen, you first need to register your business with HMRC by visiting its authentic website.
By registering with the same, you get the eligibility to apply for the self-assessment tax returns.
Also, registering on this site makes you eligible for National Insurance Contributions. Besides, you can also apply for your Value Added Tax returns by visiting this site.
How to register a sole trader business tax return? Here’s the step-by-step guide to it –
- Get the UTR number for your business. UTR stands for Unique Taxpayer Reference.
- Register your business for Self-Assessment. You can do the same either digitally or with the help of the internet. Or, you can also get help with the registration by phone.
- You can also choose to do the registration by sending the SAI form by post. For it, you just need to complete the form and submit it.
3. Business Registration For VAT:
The UK government, on its site, has mentioned an amount for every company’s business turnover crossing which makes you responsible for the VAT payment.
Does your business turnover cross that amount? Then, you need to register for VAT. How to register a sole trader business in London by doing business registration for VAT? Just follow the process –
- The VAT1 form is available online at the VAT registration site. Find and complete it in online mode.
- You can also download and print the form’s hard copy. Then, you can fill it up and submit it via post as well.
- Don’t enter any incorrect information in the business and financial info columns.
- With the completion of the VAT registration, you will get a unique registration number. Also, the UK government will provide you with a VAT registration certificate.
4. Companies House Registration:
This process is not an obligation for all businessmen. It depends on a sole trader, whether he wants to register his business with Companies House or not.
But, this kind of registration brings your business many benefits. It safeguards your business name. Not only that, it will give you the right to open your business bank account.
The additional advantage is the soaring credibility of the business. How to register a sole trader business of yours with the UK’s Companies House? Here’s what to do –
- Find out the NR1 online form. Fill it up in digital mode. Submit it.
- Give each and every detail about your business and ownership correctly.
- On proper submission of the form, you will acquire the certificate of registration for your business.
5. Applying For Mandatory Licenses And Permits:
Want to make your business go smoothly in a legal way without any hassle? Then you must know how to register a sole trader business UK legitimately.
You should know that to run it, applying for the necessary licenses and permits is vital. How to get such legal documents for your business? Well! Visit the offices of your local authorities for that.
You need to apply for the permits in the respective departments. For example, to get the business rates documentation, you need to approach the business rates providing authorities.
The trading license-providing offices will give you the trading license for your business. You also need to get the health and safety certifications and the environmental permits for your business as well.
6. Keeping Business-Related Finances In Business Bank Account:
Personal finances are different from business finances. So, you must not mix them by keeping them together in a single bank account.
It’s vital to keep your business-related finances in a different bank account. This business bank account will help you to analyze the percentage of profit you have acquired from your business periodically.
So, one of the important things you must do before or just after starting a new business is initiate a new business account. After that, you will get your business registration documents.
Also, the bank will provide you with your identification documents for the same. The business bank account allows you to open an online banking system in your account.
Also, it gives a permit for opening the accounting systems in the bank.
7. Insurance And Liability Coverage:
Now that you know, how to register a sole trader business, in the UK, you need to know how to protect your business.
Every business possesses a risk of downfall, and you can avoid this tension by purchasing insurance for the same. The insurance and liability coverages safeguard various businesses from falling and make them stand strong.
Some of the options are –
- Public liability insurance.
- Business contents insurance, etc.
You can also choose to purchase professional indemnity insurance as well. Another option for insurance is Employer’s liability insurance. You can purchase this insurance before hiring staff for your company.
8. Compliance And Record-Keeping:
Every document or transaction related to your business must have a record. So, keeping precise records of them is necessary to run your business without any hassle.
Also, compliance with regulatory requirements is needed. Maintain records regarding your VAT returns and payments.
The same is also applicable for other taxes as well. Business accounting is also vital for your business.
Besides, bookkeeping for other essential things including annual self-assessment returns is another important thing that you should do.
Some Important Links:
The UK HMRC link –
www.gov.UK/government/organisations/hm-revenue-customs
The UK Companies House Link –
www.gov.uk/government/organisations/companies-house
FAQ:
1. How much does it cost to register as a sole trader in the UK?
The application fee for business registration as a sole trader in the UK is zero. However, there are other charges related to your business that you have to pay.
These charges are to be paid for different services you get for your company. These services help run your business in a hassle-free manner. Some of the business-related charges include –
- Business insurance charge.
- Professional consultancy charge.
- VAT and other tax-related charges.
- Web hosting charges, etc.
Conclusion:
Still wondering, how to register a sole trader business in the UK? Believe us! It’s not that hard! You just need to do careful planning and follow the steps that we illustrated above.
Be attentive to detail and consult the respective local authorities to complete the different formalities of registrations.
That’s all! You’re done! Your new business, firmly standing on a solid base, will be waiting for you to get started! Best of luck! You fly high guy/gal!
