When starting a business as a sole trader, one of the first questions many people ask is: Does a sole trader need a company registration number? The short answer is no. Sole traders do not require a company registration number. However, understanding why and what you need to register is crucial to setting up your business correctly.
We’ll explain everything you need to know about sole trader registration, including what a company registration number is, how sole traders are registered, and the key differences between sole traders and limited companies.
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What is a company registration number (CRN)?
A Company Registration Number (CRN) is a unique eight-character code assigned by Companies House when a business incorporates as a limited company or limited liability partnership (LLP).
This number is used to identify the company legally and is required when filing documents with Companies House, HMRC, or for opening business bank accounts.
Typical features of a CRN:
- Issued only to incorporated businesses (e.g., Ltd companies, LLPs)
- Made up of numbers or a combination of letters and numbers
- Cannot be changed once issued
- Publicly visible on the Companies House register
Important: Sole traders do not incorporate their business with Companies House. Therefore, they are not issued a CRN.
Do sole traders have a company registration number?
No, sole traders do not have a company registration number. A sole trader operates the business as an individual and is personally responsible for the business’s debts and obligations. As they are not legally separate from the business, there’s no need for incorporation through Companies House, and thus, no CRN is provided.
However, while you don’t need a CRN as a sole trader, you must complete certain registrations to trade legally.
What does a sole trader need to register?
Although a CRN isn’t needed, sole traders must register with HM Revenue & Customs (HMRC) for tax purposes. Here’s what you need to do:
1. Register for self-assessment: You must register for Self-Assessment so you can report your earnings and pay any income tax and National Insurance contributions (NICs) due.
You can register online at the HMRC website.
2. Choose a business name (optional): You can trade under your own name or a separate business name.
If you choose a business name:
- It must not include “limited”, “Ltd”, “LLP”, or anything that implies you are an incorporated entity.
- It must not be offensive or misleading.
Note: Sole trader names aren’t registered centrally unless you trademark them.
3. Obtain additional licences (if required): Depending on your industry, you may need specific licences or permits (e.g., for food handling, street trading, financial services).
Company registration number vs. sole trader registration
| Feature | Company Registration (CRN) | Sole Trader Registration |
|---|---|---|
| Registered with | Companies House | HMRC |
| Receives CRN? | Yes | No |
| Legal entity | Separate from owners | No separation — individual is the business |
| Required documentation | Incorporation documents | Self-Assessment registration |
| Public record | Listed on the Companies House register | Not listed publicly |
In summary:
- A limited company must have a CRN.
- A sole trader does not need, and cannot get, a CRN.
Why is there confusion about sole traders and CRNs?
Many new business owners assume that all businesses need some form of company number to operate. This confusion is understandable but incorrect.
The main sources of confusion include:
- Terminology: The word “company” is often used informally to mean “business,” but legally, a company refers specifically to a registered entity with Companies House.
- Bank accounts and suppliers: Some business bank accounts and suppliers request a company number on forms. In this case, sole traders can simply indicate “Not Applicable” or explain they are a sole trader.
When might a sole trader consider incorporating?
While starting as a sole trader is simple and flexible, there may come a time when incorporating a business becomes beneficial.
Common reasons to incorporate include:
- Limiting personal liability
- Potential tax efficiencies once profits exceed a certain threshold
- Enhanced credibility with clients, suppliers, or lenders
- Opportunities for investment or selling the business
If you decide to incorporate, you’ll then receive a Company Registration Number.
Summary
If you’re setting up as a sole trader, you do not need a company registration number. Instead, your main legal obligation is to register with HMRC for tax purposes. While forms and applications may ask for a CRN, as a sole trader, you can simply indicate that it doesn’t apply.
Understanding the difference between sole traders and limited companies ensures you set up your business correctly and avoid unnecessary confusion. If your business grows or changes in the future, you always have the option to incorporate and obtain a CRN when the time is right.
