How Soon Do You Need to Register Your Company Once You Start Trading?
Starting a business is an exciting step, but it also comes with a number of responsibilities, especially when it comes to registering with HMRC and staying compliant from the outset.
One of the most common questions we’re asked is:
“How soon do I need to register my business once I start trading?”
The answer depends on how your business is set up. We explain all below.
If You’re a Sole Trader
If you’re starting as a sole trader, you don’t need to register before you begin trading.
However, you must register with HMRC for Self Assessment by 5 October following the end of the tax year in which you started trading.
Example:
If you start trading in June 2026, the tax year ends on 5 April 2027, so you must register by 5 October 2027.
Although this might seem like plenty of time, it’s usually best to register sooner rather than later. This helps ensure everything is set up correctly and avoids any last-minute issues.
If You’re Starting a Limited Company
If you’re setting up a limited company, the process is slightly different.
You must:
- Register your company with Companies House before you start trading
- Register for Corporation Tax with HMRC within 3 months of starting to trade
This means that even after your company is formed, there is still a separate requirement to notify HMRC that your company is active.
What Counts as “Starting to Trade”?
This is another area that often causes confusion.
You are generally considered to have started trading when you:
- Begin selling goods or services
- Start advertising or marketing your business
- Receive income from your business
In some cases, activities like purchasing stock or setting up your business can also be considered the start of trading, so it’s important to keep records from the very beginning.
Other Key Registrations to Be Aware Of
Registering your business is just one part of getting set up properly. Depending on your circumstances, there may be other requirements to consider.
VAT Registration
You must register for VAT if your turnover exceeds £90,000 (current threshold).
You can also choose to register voluntarily if it suits your business, for example if you work with VAT-registered clients or want to reclaim VAT on expenses.
PAYE (If You Have Employees)
If you plan to hire staff - including paying yourself a salary through a limited company, you will need to register as an employer and set up PAYE (Pay As You Earn).
Business Bank Account
While not always legally required for sole traders, having a separate business bank account is strongly recommended.
It makes bookkeeping easier, helps you stay organised, and ensures your records are clear if HMRC ever reviews them.
For limited companies, a separate account is essential.
Record Keeping
From day one, you should keep accurate records of:
- Income
- Expenses
- Receipts and invoices
This is not only important for your tax return but will also become essential as Making Tax Digital is introduced.
Common Mistakes to Avoid
When starting out, it’s easy to overlook some of the basics. A few common mistakes include:
- Leaving registration too late
- Not keeping proper records from the start
- Mixing personal and business finances
- Not setting money aside for tax
Getting these right early on can save a lot of time, stress and potential penalties later.
Final Thoughts
You don’t always need to register immediately when you start trading, but there are clear deadlines depending on your business structure.
Understanding these requirements early on helps you stay compliant and gives you confidence that everything is set up properly.
If you’re unsure what applies to you or want help getting started, it’s always worth seeking advice sooner rather than later.
Need Help Getting Set Up?
At Blue Rocket Accounting, we help new businesses get everything set up correctly from day one - from registrations to bookkeeping and ongoing support.
If you’re starting a business or have recently begun trading and want to make sure you’re doing things properly, get in touch with our team. We’ll be happy to help.
Further reading...
How and why you should register and sign in to your Government Gateway / HMRC Online Services
How Much Tax Should I Set Aside? - Free Tax Percentage Calculator
Do Start-up Businesses Need an Accountant?
