If you want to start a business in the UK – as a UK resident or non-resident – the obvious starting point is ascertaining whether or not you are permitted to. This is because, whilst the rules on who can register a UK business are fairly relaxed, there are some restrictions in place. In this article, we hone in on what it means to ‘register a business’ in the UK and look at who can and can’t do this.
To ‘register a business’ is to make it official
In the UK, registering a business means that you are notifying the appropriate government bodies of your business’ existence. This is a legal requirement if a business (that’s trading in the UK) is earning more than £1,000 in a tax year. The reason for this is to ensure that the business is paying the necessary tax on what it is earning.
There are several ways to make a business official. The two most popular methods are to register as a sole trader with HMRC or to register a company limited by shares with Companies House.
These are two very different business structures. With a sole trader, there is no legal distinction between the person and the business. They are essentially the same thing. If the business were to encounter financial difficulties or be sued, the personal assets of the owner would be at risk.
Comparatively, in a company limited by shares, the business owner (known as a shareholder) is legally separate from the business itself. This provides an element of financial protection if the company were to accrue debts or face legal action.
For more information about the advantages and disadvantages of both structures, we recommend reading this article: Sole trader or limited company?
Who can register as a sole trader?
You can register as a sole trader, regardless of your nationality and place of residence, provided that you have a National Insurance (NI) number.
If you don’t have an NI number, you can apply if you are currently residing in the UK and have the right to work in the UK. You cannot apply from outside of the UK.
NI numbers are automatically allocated to UK residents just before their 16th birthday. As such, this generally means anyone under the age of 16 cannot register as a sole trader.
You can register as a sole trader if you have been declared bankrupt, or if you have been disqualified from being a company director (more on this below).
See here for more information about registering as a sole trader, including how to get started.
Who can register a limited company?
To register a limited company or company limited by shares, you will need at least one shareholder and one director. This can be the same person taking on both roles, or it can be shared among multiple people.
1. Shareholders
Anyone can be a shareholder. Nationality, location, and age do not matter, and there’s no requirement for an NI number.
Theoretically, a child can be a shareholder, although it is possible for a company to place an age restriction on shareholders through provisions in the articles of association (the internal document that outlines how the company should be run).
2. Directors
When it comes to the director, there are rules in place. Nationality and place of residence still do not matter, and again there’s no requirement for an NI number. But, to be a director, an individual must:
- Be at least 16 years old
- Not be an ‘undischarged’ bankrupt (a person currently going through the bankruptcy process)
- Not be disqualified from being a company director (unless a court has granted permission)
A person can be disqualified from being a director for a number of reasons, all of which are related to unfit conduct in a previous directorship that they have held. If an individual has not been a company director before, they will not be disqualified from being a director.
A UK-based registered office address
As you can see, the rules on who can register a company are relatively relaxed.
Perhaps the biggest hurdle for anyone wishing to register a company (certainly for non-UK residents), is the need to provide a UK-based registered office address.
This is the official address for the company and where government bodies such as Companies House, HMRC, and the Information Commissioner’s Office will send their correspondence.
Any address (including residential, although this is not recommended) can be used as a registered office address, provided that:
- The address is UK-based
- The property owner has granted their permission for the address to be used as a registered office
- Correspondence sent by government bodies is seen by the company directors
Fortunately, this enables a company to legitimately use an address that is not its own as the registered office address.
So there you have it
We hope this article has been useful in helping you ascertain whether or not you can register a business in the UK.
If you have decided that a company limited by shares is the right route for you and your business (and you’re at least 16 years old, are not an undischarged bankrupt, and haven’t been disqualified from being a company director), we can help register your company through our range of company formation packages, where prices start from £52.99.
What’s more, if you are a non-UK resident, we offer a dedicated Non-Residents Packages (from £159.99), that provide you with everything you need to register a company in the UK, including our Registered Office Address Service.
Thanks for reading. Please leave a comment if you have any questions.
