Registering your home business

What to do when you set up a home business

Today’s guest post looks at the choice of business structures available when starting a home business and the steps required for each:
 
Whether you’re already running a home business or are still pondering the logistics of it, one thing that must be taken into consideration when running your own business is ensuring it is properly registered. This ensures that you are paying the correct tax out of your income. Thankfully, it’s an easy process to go through; here we’ve detailed the different types of business structure you might have for your home business, and how to go about registering them. 
 
Sole traders
Most people who work from home are self-employed or sole traders – this is when you own your businesses yourself and are solely responsible for its income and outgoings, including debts and financial disputes.
To register, simply head to the website for HM Revenue and Customs (HMRC) and fill out the self-employed tax forms as soon as you can after starting your business. After this you will be required to fill out a Self-Assessment form once a year – all of which can be carried out online.
 
Partnerships
A home business may be run as a partnership, in which two or more self-employed people have equal responsibility for the business. You’ll need to choose a nominated partner to register the business and take responsibility for managing tax returns; however, all partners will be responsible for their own Self-Assessment forms and National Insurance payments.
Registering your home business as a partnership is a big step, so ensure that all parties are aware of their roles and responsibilities before committing, and speak to a solicitor who will be able to talk you through the whole process and ensure you have everything covered.
 
Limited Companies
A limited company has directors and shareholders, and may offer tax advantages to a home business, but comes with more onerous paperwork you are legally obliged to complete by its due date. To receive your Certificate of Incorporation confirming that your company legally exists you need to supply a memorandum of association, which details your company’s shares, and articles of association, detailing how the company is structured.
You can register via the Companies House website or by using dedicated formations services such as The Formations Company, who can automatically register your company at Companies House and provide you with advice and support.
 
If you are planning to register a company with other people, it is always worth speaking to an accountant and a solicitor, as they will be able to identify anything missing from your initial set-up. This should then leave you free to concentrate on the day-to-day running of your home business, and enjoy the newfound freedom of working from home!