Have you been thinking of starting your own business in the UK?
You’re not alone.
In 2024, over 800,000 new companies were registered with Companies House – a record high that shows the UK’s buoyant entrepreneurial spirit.
While there is a lot of enthusiasm around, many startups end up falling into avoidable traps when registering the company. The most common mistakes made include choosing the wrong business structure and failing to file papers properly. This can mean you lose the time, the money, and even the credibility of your business. So, how can you make your business launch smooth and untroubled?
In this blog, we lay down the most common pitfalls and how to avoid them to get a smooth start.
1. Choosing the Wrong Business Structure
The first and most important decision is choosing a suitable business structure. That said, the most common types of businesses in the UK are sole traders, partnerships or limited companies. However, most new entrepreneurs sign up for a limited company without knowing what it means.
Why it’s a mistake?
The advantage of a limited company is that it protects your assets, but it has more complicated tax and reporting obligations. A sole trader is a simpler and more tax-efficient way to work if you are a freelancer or a low-risk business.
What to do instead?
Consult a company registration UK service provider, an accountant or a business advisor, as they can suggest what suits your business purpose, risk tolerance and tax background.
2. Failing to Check Company Name Availability
This is basic, but it happens more than you would think.
If your name is too similar to one already taken by an existing company or trademark, registering that name can cause delays, lawsuits, or the need for you to change your name.
Why it’s a mistake?
Your name will be rejected by Companies House if it uses a name similar to one already used by an organization, and trademark holders can object to your usage. The legal battles resulting from such a case can become costly and cause brand confusion.
What to do instead?
Never settle on a name until you have used the Companies House name availability checker or the Intellectual Property Office (IPO) database for trademarks.
3. Providing Incorrect Information
You easily miss typing your company’s registered address and assigning incorrect SIC (Standard Industrial Classification) codes. Such small errors can have big consequences.
Why it’s a mistake?
Incorrect SIC codes can lead to the wrong tax classification and limit you from getting certain benefits and grants. Moreover, not updating or correcting errors in addresses or director details may result in a delayed incorporation process or a non-compliance notice.
What to do instead?
Double-check all details before submission. It would also be wise to have someone else check the information for accuracy.
4. Not Having a Shareholders’ Agreement (for Multi-Owner Companies)
Failing to draft a shareholders’ agreement when starting the business with partners or investors is trouble waiting to happen.
Why it’s a mistake?
Without a formal agreement, disputes over equity, decision-making, or exit strategies can become messy and expensive.
What to do instead?
Even if you trust your co-founders fully, a legally binding shareholders’ agreement outlines roles, rights and what happens when one person wants to leave.
5. Using Home Address as Registered Office
It is allowed, but not a good idea always, as the public will have access to your company’s registered address.
Why it’s a mistake?
Your home address compromises your privacy, and it may not offer the professional image you wish to present.
What to do instead?
For better privacy and professionalism, use a virtual office or a third-party registered office service.
6. Ignoring Ongoing Compliance Requirements
The first step in registering your company is just the start. However, onerous tasks like annual confirmation statements and filing accounts are forgotten about.
Why it’s a mistake?
If your company does not comply with the statutory requirements, you could be slapped with a fine, be struck off the register, or you may have to face your director disqualification.
What to do instead?
Calendar reminders can be set, and you can use accounting software or consult a company secretary/accountant to stay compliant on a yearly basis.
7. Not Registering for the Right Taxes
There is no automatic cover in terms of your tax obligations just by registering a company. For instance, VAT registration is only required once your revenues reach a certain point (£90,000 in 2024).
Why it’s a mistake?
Fines and audits can result from missing tax registrations (VAT, PAYE for employees, Corporation Tax etc.)
What to do instead?
Recognize the tax obligations related to your industry and business structure. HMRC’s website is full of detailed guidance, or, much better, you can just talk to a tax advisor on the phone.
8. Skipping Professional Advice to Save Costs
After all, Companies House allows you to register a company online for £12. But going solo can backfire.
Why it’s a mistake?
You may lose out on saving in registration fees, paying avoidable taxes and correcting mistakes later.
What to do instead?
Take it as an investment and choose to speak to an accountant or formation expert before starting your business.
Conclusion
Company registration in the UK is designed to be accessible, but it’s not foolproof. By avoiding these common mistakes, you’ll not only protect your business legally and financially—you’ll also set the stage for long-term success. Remember: getting it right from the start is far easier (and cheaper) than fixing it later.
So, take the time to plan, seek expert advice, and confidently launch your company.