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Director What Are The Official Sole Trader Companies House Requirements

Tony Dhanjal

Sole Trader Companies House

This Article Contains

Starting out in business can be an exciting time for those looking to try something new but many find that the early stages can be equally stressful as they are exciting. On top of building something successful, ensuring you meet all of the reporting and registration requirements for your fledgling business only adds to the headache. In todays article we will be answering the question does my sole trader business need to be registered with Companies House? As well as exploring other sole trader companies house issues.

What Is A Sole Trader?

A sole trader is a type of business setup that involves an individual operating a business as themselves. The business often has a different name from the individual but from a legal standpoint the individual and the business are one and the same. The sole trader setup (also referred to as self employed) is considered the most basic setup a business can take. It usually involves the least amount of paperwork and has the comparatively few filing requirements when compared to other setups. Many start ups and small businesses operate under this setup in the early stages to keep costs and reporting requirements low before later opting for an alternative setup.

And Who Are Companies House?

Companies House are an executive agency, sponsored by the department for business, energy and industrial strategy. Companies House incorporate and dissolve limited companies, as well as registering company information and making it available to the public

In plain English they maintain records of limited companies, such as who owns the company, what the company does and where the company is registered. They also hold financial information from the companies and make the data available to the public.

If you want to know who owns a particular company or are interested in its financials then you can usually obtain this information via Companies House.

Sole Trader Companies House Reporting Requirements

If you’re considering a sole trader setup for your new business then you may have questioned the sole trader Companies House relationship but you’ll be pleased to know that the sole trader Companies House relationship is non existent. There is no need for a sole trader to file any information with or report to Companies House. This is because Companies House only require filings from limited companies and although many people will confuse the word company with business, the two are not the same.

A sole trader would only need to report to Companies House if at a later date they decided to incorporate their business and “go limited”.


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Sole Trader Reporting

So if the sole trader Companies House relationship requires no reporting then who does the sole trader report to? 

Well, a sole trader is only required to report to HMRC. This is done by registering as self employed and then filing annual self assessment tax returns to report earnings and calculate tax payable. 

A sole trader must register for self employment no later than the 31 October following the end of the tax year the self employment started in. This can be done directly on the HMRC website

Following this they will be required to report profits from self employment along with any other income the individual might have before 31 January following the end of each tax year.

There could be additional reporting requirements such as payroll reporting but this will only be for businesses who take on employees. Once again though it would be HMRC that the self employed business would report payroll details to.

What Do Limited Companies Report To Companies House?

If you operate your business through a limited company then you will need to report to Companies House as well as HMRC.

Initially the company needs to be registered within the first 3 months. If you form the company via a formation agent (which is a very common option) then the formation agent will usually ensure the company is registered correctly. Alternatively you can register directly with Companies House online at a cost of £12.

The company also needs to file a confirmation statement annually which updates or confirms the details held by Companies House are still correct. The confirmation statement confirms details such as registered office, names of directors and the business activity.  This also attracts a filing fee of £13 when filed online and must be filed for all limited companies, even those that have not traded or are dormant.

Finally the limited company will also need to file annual accounts with Companies House. This can usually be done at the same time they are filed with HMRC. The amount of detail included in the accounts will be based on the size of the company and the deadline is dependent on the type of company. For private limited companies the deadline is usually 9 months following the end of the period in question although at the time of writing there is currently a 3 month extension available due to the ongoing pandemic.

Is It Free To Register As A Sole Trader?

To register as a sole trader business is usually free in that there are no charges or fees payable to HMRC who govern this setup. This is one of the reasons many businesses in the UK choose to start their journey under a sole trader setup. Of course there are many other things that should be considered when deciding which setup is best for your business, such as:

  • Tax efficiency – you should consider which setup will pay the least tax. It is often the case that the tax savings of a more efficient setup will outweigh the increased costs of reporting.
  • Liability – the sole trader setup doesn’t offer the owner any limit to their liability and may be considered riskier that a limited company setup.
To learn more about the differences between setups and assist you with your decision check out our article limited company v sole trader.

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Practice based accountant with over 10 years experience, specialising in SME's, Freelancers and Personal Tax. "I take pride in proactively recognising tax planning opportunities on behalf of clients to help them operate more efficiently."

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