Types of businesses and who to register with
When you set up in business there is one key organisation to contact and inform is HM Revenue & Customs (HMRC).
If you decide to start a limited company or a limited liability partnership you will also need to register with Companies House.
Before contacting either, have a think about the company status that suits you best.
There are a number of options:
As it sounds, this means working for yourself; you keep records and accounts of your own activity, and, in acting alone, get to keep all the proﬁts – but are also solely liable for any debts.
If you set up as a self-employed sole trader you don’t need to register with Companies House or take on many of the accounting duties that come with being a limited company, as outlined below. Whilst there are continuing ﬁling obligations with Companies House for a limited company or LLP, there is also the key beneﬁt of the owners not being personally liable for any of the company/partnership’s debts.
If you’d like to be self¬employed but want to work with a friend or colleague, consider a partnership. It means that two or more people share the risks, costs, proﬁts and workload. Partnerships do not have to ﬁle accounts at Companies House but there are ﬁling requirements with HMRC, as outlined below. A limited liability partnership or LLP is structured in the same way as a normal partnership but, as it sounds, limits the liability of each partner. An LLP is required to ﬁle many of the same documents with Companies House as a limited company.
Find out more about the legal status of partnerships by live chat or click the Gov icon: (upload gov icon and link to https://www.gov.uk/set-up-business)
Limited companies exist in their own right, with the company’s ﬁnances kept separate from the personal ﬁnances of its owner(s). Limited companies have ﬁling responsibilities with both Companies House and HMRC as noted below, but it’s now much easier to launch a limited company as there is no longer a need to appoint a company secretary. So you can be a limited company with a headcount of one, like many small businesses!
The status of your company will affect how much admin you have to do and the kind of ﬁnancial records you must keep and ﬁle. Take advice from your accountant or local tax ofﬁce on which one to choose, as much depends on the type of business you will be running.
Should you decide to start a social enterprise – a business trading for social and environmental purposes – there are additional legal structures to consider, including:
-Community interest company (CIC)
-Industrial and provident society
You can incorporate a company yourself online with Companies House for a small fee.
Every year limited companies and LLPs must ﬁle a copy of their accounts and an annual return with Companies House. This then becomes public information.