If you are thinking about starting a website, one of the first things you may be wondering is if you need to register your site as a business. The answer to this question depends on a few factors, including what type of website you plan on running and what kinds of activities you’ll be doing through your site. In general, however, most websites need to be registered as businesses to operate legally if they will generate an income for their owner.
Consider Whether You Need to Setup a Business
First and foremost, you need to consider whether you ever intend to make money from your website. If you don’t and just wish to create a website for personal reasons, then go ahead and start building your website; read no further.
If you do, you will most likely need to register your business. The point at which you do so will depend on a few factors.
Company Structure
When registering your website as a business, the company structure is an important thing to consider. If you are running the website as an individual with no other parties involved, you have a choice of how you legally set up your business. You can choose the simple self-employment route, or you can create an Ltd company that may take a little more thought.
If you are running your website with other people, you should consider setting up as an Limited company or Partnership. Which to choose, however, is a topic of its own.
Will You Earn More than £1000 with your website?
Currently, in the UK, if you earn under £1000, then there is no legal obligation to register your business with the government. You can read more about it on Gov.uk.
If you don’t think you’ll earn over £1000 this year, then there is no reason to register as self-employed, and you can trade on your website without registering.
What other laws do you have to observe?
There are, however, some legal obligations outside registration that may apply to your website. Some laws to look into are:
- The Consumer Protection (Distance Selling) Regulations 2000
- Companies Act 2006
- Sales of Goods Act 2015
Depending on how you operate your website, you may need to have certain information displayed. Regardless of whether it is legally required it is still good practice to display the following to website users:
- Privacy policy
- Contact details – physical, email and telephone
- Cookie Consent- If you use tracking on your site, e.g. Google Analytics, under GDPR rules, it is a legal requirement to enable users to control their cookie settings.
Do I need to register my website if I’m only using AdSense?
Whilst you may not be selling physical items or services, selling ad space on your website is still considered income in the UK, and you must declare your income on your tax return.
Again, if you earn under £1000 per year from this, then there is no reason to register your website as a business. Once it goes beyond that, you will have to register as self-employed or set up an Limited company.
What are the benefits of registering my website as an Ltd Company in the UK?
There are many benefits to setting up a Limited company in the UK, including:
- Limited liability: As a shareholder in a limited company, your personal assets are protected in the event that the business is unable to pay its debts.
- Flexible ownership structure: A limited company can have any number of shareholders, making it easy to bring in additional investors or partners.
- Increased credibility: Limited companies are perceived as being more professional and trustworthy than sole traders or unincorporated businesses. This can make it easier to win new customers and clients.
- Potential tax advantages: Limited companies may be eligible for certain tax breaks, such as the small business corporation tax rate.
- Dividend Allowance: The first £2000 taken out in dividends will avoid personal tax