Start-ups are today's global symbol of progress. New entrepreneurs are inventing innovative ways to improve people's lives and take control of their own success. However, people often ignore the most important phase in today's business frenzy. Although registering your small business may appear to be a large undertaking, it is a wise decision for young businesses and is often an easier process than it seems.
In 2020, The Office for National Statistics estimated that 3.3 million businesses were trading without being registered for VAT or PAYE, and were therefore classified as 'unregistered'. This means a huge 56% of UK businesses are unable to access important financial and education resources.
Read on to find out why, registering your business will benefit you.
1. It enhances your identity and develops a brand
Your company name is key to creating your brand identity. Registering your business will give you a chance to check whether the name you want to use is unique and not similar to an existing company name or trademark. It also helps business to be identified easily by consumers.
2. It adds credibility to your business
Registered businesses are more credible in consumer minds than an unregistered one. Customers prefer to do business with well-established companies. The 21st Century customer is digitally capable, is growing more sophisticated, and they're doing their homework before buying from a company. When you register your business, you get a start date that shows how long you've been in operation.
3. Registration Provides a Tax Benefit
You are more likely to pay less personal tax as a Limited Company than as a self-employed lone entrepreneur. Profits earned by limited companies are subject to UK Corporation Tax, which is presently set at 19%. If you are a director and shareholder of a limited company, you may choose to take a low salary and receive the majority of your income through dividends. You can effectively lower the amount of National Insurance Contributions (NICs) you will have to pay by doing so.
Limited company dividend payments are not subject to NIC payments because they are taxed individually. As a result, you may be able to keep more of your profits from your firm.
4. It establishes your company as a separate financial entity
Your personal and business finances will be treated separately after your company is incorporated. This means that unless you have personally guaranteed the debts, your personal assets cannot be seized to satisfy corporate debts, and you cannot be held liable for the debts.
5. It protects you from personal liability
Your company is now an independent legal entity as a registered business. This means that any legal issues will be kept apart from your personal life.
6. It makes the business real for you and keeps you focused
Having a formal business will motivate you to devote your time and efforts to it. You may be proud of being a business owner; it's no longer just a concept or a pastime.
7. It attracts business and funding opportunities
You must have an official business registration in order to qualify for a business loan. When you ask for investment in a registered business, investors are more likely to take you seriously. Another advantage of company registration is that it allows a firm to create a corporate bank account and apply for a simple bank loan.
You’ll also need to register your business in order to access funds such as European Regional Development Fund or other state-aid initiatives for businesses. Through these programmes you can access free business and marketing skills training, or even launch new products to market. Find out more about South Bank Innovation’s ERDF programmes here.
Registering your business in London is simple and you can do it directly from the GOV.UK website. Visit here for detailed information. The fee for registering your business starts from only £12.
Once you’ve registered your business, check out the free support you can get from South Bank Innovation to help your business grow.