Do you have to register with Companies House if you’re a sole trader?

Companies House is the UK’s registrar of companies and the government agency responsible for incorporating and dissolving limited companies. If you’re setting up as a sole trader (i.e. self employed), do you have to register your business too?

This is something we’re asked fairly often at ByteStart.

There are several quite significant differences between working as a limited company or as a sole trader, and the way you interact with government agencies is one of them.

What is Companies House?

Companies House has a key role in maintaining an accurate and up-to-date register of UK limited companies and ensuring compliance with reporting requirements.

Here are some key facts about Companies House:

• Registration – All limited companies in the UK must be registered with Companies House. This includes public limited companies (PLCs) and private limited companies (LTDs).
• Company information – Companies House holds information on all registered companies such as company name and number, registered office address, directors and shareholders, annual accounts, and company status. Most of this information is publicly available online.
• Filings – Limited companies must submit certain documents to Companies House on an annual basis such as confirmation statements and annual accounts. Companies House maintains these filings in the public record.
• Incorporation – People looking to set up a new limited company can use Companies House online services to check if a company name is available before they complete the incorporation process.
• Compliance – Companies House has the power to strike companies off the register if they fail to submit required filings. Tougher anti-fraud measures are expected to be introduced over the next year.

Do sole traders have to register with Companies House?

No. Sole traders and partnerships do not need to be ‘incorporated’. In essence, if you’re a sole trader, your business and you (the person) are treated as the same entity from a legal point of view. Find out more in our guide to becoming self employed.

However, you must register for self assessment with HMRC if you set up a business as a self employed person. You must also keep accurate records and pay any tax you owe on time. You can read more in our guide to paying tax as a sole trader.

Dealing with Companies House is typically not a problem for company owners – especially if you keep up with your responsibilities, and file your annual accounts and confirmation statement in an accurate and timely manner.

However, for many business people, not having to do so is a key benefit of setting up as a sole trader.

Are there any situations where sole traders would deal with Companies House?

As we’ve explained, there is no statutory requirement for the self employed to deal with Companies House in any way.

However, there are several scenarios where a sole trader would need to do so.

Setting up a dormant limited company

You might decide to register a company and keep it dormant to protect the ‘limited’ version of your business name.

A dormant company is one which is registered with Companies House, but is not actively trading.

If you set up a dormant company, you still have a number of reporting responsibilities.

Changing business structure from sole trader to limited company

There are pros and cons to running a business as a sole trader vs. a limited company. We look at these in detail here.

At some stage, you might feel that your business would be better served via the limited company structure.

A limited company, as the name suggests, limits the liability of its owners should the business experience financial difficulties. There is also a relative tax advantage to the limited model compared to the self-employed route.

In some industries (such as consulting), some clients will only do business with you if you have a company. In some cases, having a company provides a more ‘professional’ appearance.

If you would like to incorporate a new company, start with our guide to setting up a new company. Read our other guides to familiarise yourself with the formations process, and make sure that going limited is the right thing for you.