Choose your structure
Most new businesses in the UK operate as either a sole trader (you and the business are legally the same person — simple, no registration required beyond HMRC notification) or a limited company (a separate legal entity, offering limited liability protection and typically more tax-efficient above a certain profit level).
Registering
Sole traders: register with HMRC for self-assessment by 5 October of the tax year after you first become self-employed. Limited companies: register with Companies House (the UK registrar) at companieshouse.gov.uk. This costs £50 online, takes minutes, and gives you a company registration number. You will also need to register the company with HMRC for corporation tax.
Tax obligations
Sole traders pay income tax and National Insurance on business profits via self-assessment. Limited companies pay corporation tax (currently 19-25% depending on profit level), and directors who take a salary also pay income tax and National Insurance. VAT registration is required once taxable turnover exceeds £90,000; many smaller businesses voluntarily register earlier.
Practical essentials
Open a dedicated business bank account — keeping business and personal finances separate is essential for accounting and tax. Get appropriate insurance. Consider whether you need planning permission or specific licences for your type of business. If you employ people, set up a payroll scheme and comply with auto-enrolment pension obligations from your first day as an employer.