The choice is between trading as yourself and creating a separate legal person to trade for you. Almost everything else follows from it, and the honest answer for a business that has not started earning yet is often "not yet".
Trading in your own name
No registration, no cost, no annual filings. Your business income is your income, declared in your own return, and you will almost certainly be a provisional taxpayer.
The exposure is that there is no separation. A debt of the business is your debt, and it reaches whatever you own. For a consultant with no stock, no premises and no staff, that exposure may be genuinely small. For anyone with employees, inventory, a lease or physical risk, it is not.
A private company
A separate legal person. It contracts in its own name, its debts are ordinarily its own, and it continues to exist independently of you — which is what makes it sellable, shareable and inheritable.
What you take on is permanent administration: annual returns every year, separate company tax, records kept properly, and a bank account of its own. That is a real ongoing cost in money and attention, and it is the part people underestimate.
What actually decides it
- Who your customers are. Many larger buyers will not contract with an unregistered supplier at all, and most procurement requires a registration number. If that is your market, the decision is made for you.
- What you could lose. Employees, premises, stock, vehicles, physical risk to members of the public — all argue for separation.
- Whether anybody else is involved. Two people in business together should have a company and a shareholders' agreement, not a handshake and a shared account.
- What you earn. Above a certain level the tax treatment starts to matter enough to be worth a conversation with an accountant.
The limits of the protection
Worth knowing before you rely on it. Personal surety on a lease or a loan puts the debt back on you, and lenders ask for it precisely because they understand limited liability. Money withheld from staff and not paid over can reach directors personally. So can trading on while knowing the company cannot pay.
The separation is also something you maintain rather than something you registered — running personal spending through the company account steadily undermines the argument that it was ever genuinely separate.
You can change later
Starting as a sole proprietor and registering a company once the business is real is a completely normal path, and it avoids paying for administration on something that turned out not to work.
What you cannot do easily is unwind a company you registered and then ignored. If you register, commit to the filings.
General guidance, not legal, tax or financial advice. Take advice on the structure that suits your circumstances.