Business Requirements: Checklist

Business Requirements: ChecklistEvery year, hundreds of thousands of entrepreneurs decide to make the most of the UK's dynamic business culture by setting up a new company. Setting up a new business is not a matter that can be taken lightly, as there are many requirements that need to be complied with before a business can become operational.

Legal requirements

Admittedly, compliance with legal requirements is one of the most complex factors involved in setting up a new business. Although business owners are strongly advised to seek the guidance of a professional, it is also recommended to be aware of the main duties and responsibilities entailed in setting up a new business. From a legal point of view, these duties and responsibilities can be classified into four main areas:
1. Business Registration
2. Tax
3. Insurance
4. Health and Safety
Let's take a closer look at each of these areas.

1. Business Registration

Every business that operates in the United Kingdom must register with HM Revenue and Customs. It must be noted that this requirement applies to all businesses regardless of their size, so even sole traders need to perform this step. The process involved in registering a business varies depending on the company's structure. In the case of sole traders, business registration requires providing HMRC with the owner's national insurance number and registering for self assessment (see section entitled "Tax Matters" for further details).

Limited liability companies must provide HMRC with a physical address, the full company name, and their articles of association. In addition, they must appoint at least one director and one shareholder. Moreover, businesses that operate under a limited liability company structure must also register with the Companies House. Registration can be done online, by post, or using what is known as a formation agent. A further requirement involves the necessity to keep records of capital allotments, ownership of shares, and share certificates. Failing to comply with this requirement is considered a criminal offence.

Limited partnerships need to register for self assessment and designate a nominated partner, who will be responsible for ensuring that the company complies with the relevant legal and tax requirements.

Another point worth keeping in mind involves the registration of trade marks. Whenever a newly established business wishes to register its brand name and logo, it must do so by applying for online registration with the Intellectual Property Office. A non-refundable fee of £170 applies to trade mark registration.

2. Tax

UK companies are required to pay national insurance contributions (NICs) if their annual profits exceed £5,885. Sole traders are considered self-employed for national insurance purposes. The amount of NICs is graded according to profits and ranges between £0 and £2.75 per week + 9% on profits. Sole traders who employ other people must also pay income tax and ensure that a PAYE system is in place. Sole traders and limited partnerships need to register for self assessment in order to file their tax returns. This can be done online, and the registration must be complete no later than 5 October following the end of the relevant tax year.

Limited companies (but not limited liability partnerships) must pay corporation tax on taxable profits. This requires filing a company tax return at the end of the financial year or within 12 months of the last accounting period. Corporation tax must be paid within 9 months and 1 day of the last day of the most recent accounting period. This tax can be filed and paid for online.

UK businesses whose annual turnover exceeds £81,000 must register and pay for VAT. VAT registration can be done online using the Government Gateway service.

3. Insurance

According to the Compulsory Insurance Act 1969, any UK business that employs individuals must have employer's liability insurance in place. The law also requires that a valid insurance certificate is displayed at the workplace. It is important to remember that employer's liability insurance policies must be issued by an approved insurer. A detailed list of approved insurance providers can be obtained from the Financial Conduct Authority website. Having other types of business insurance (including professional, tradesman, and shop insurance) are strongly recommended, but it is not mandatory.

Health and Safety

New business owners must ensure that their company complies with all health and safety requirements. These vary depending on the nature of each business and the risk associated with the business day-to-day operations. Further information can be found here.

Getting help and support

Please refer to the following websites if you require further information on any of the points mentioned above:
Gov.uk Business Support Helpline
UK Companies House
PAYE and Payroll
Health and Safety