Company Incorporation in UK
When you set out to form a new company, you need to choose the category of company that will be registered at Companies House. Depending on the nature of your business, there is a wide range of designations to choose from. We will outline the basic steps and will simplify the process as much as possible.
An Overview of the Different Types of Companies
- Setting Up a Private Limited Company (Ltd)
- Setting Up a Public Limited Company (PLC)
- Setting Up a Partnership
- Setting Up as a Sole Trader
Setting Up a Private Limited Company (Ltd)A private limited company (Ltd) is a corporation whose financial obligation is limited by shares, which is the most common form of privately held company. WE CAN SET UP YOUR LTD COMPANY IN 1 HOUR.
- The limited company business structure is different from the sole trader structure in a way that your company and personal finances are kept separate.
- Limited companies are supposed to pay corporation tax on their profits, whereas sole traders are taxed under the self-assessment system.
- If a limited company is going to achieve a turnover of £85,000 or more per year, it must register for VAT (Value Added Tax).
- Limited company directors have to face more legal, financial and administrative responsibilities, compared to sole traders.
- A limited company is owned by its shareholders.
- Its directors and shareholders have 'limited liability' i.e. their personal assets cannot be touched. For sole traders, their personal liability is unlimited.
- A Private Limited Company cannot offer shares for sale on the stock market, whereas a Public Limited Company can.
Company Formation - A Same Day Service
Our firm has been established to provide the practical guidance and qualified assistance in starting and running a business worldwide. The process of registration of any Limited Company takes approximately 2 hours at Companies House (provided there is no backlog at Companies House). After the confirmation, we will forward you the Certificate of Incorporation and the Articles of Association.
The limited company should only take any contracts or business after the date of incorporation. The following information will be required in order to set up a limited company for you:
- The company name
- Your full name
- Your address
- Your home and mobile telephone numbers
- Your date of birth
- Your nationality
- Your job description (IT, accounts, marketing, business consultant, etc.)
- The Registered address of the company
From 6 April 2008, it is no longer a legal requirement for a limited company to appoint a company secretary although you may still choose to do so if you wish. However, many companies still have a company secretary appointed to file the necessary paperwork with Companies House. The company secretary should be over the age of 18 and it’s not necessary for the person to be a UK citizen or resident but they should be easily contactable.
The Company Secretary must provide the following information:
- Full name
- Home and mobile telephone numbers
- Date of birth
- National Insurance Number
Setting Up a Public Limited Company (PLC)
- A public limited company (PLC) is the type of company which allows the offer of its shares to the general public. As with any other designation, a PLC has certain requirements. It requires a trading certificate, a minimum of £50,000 worth of share capital, with a quarter of that paid. Two directors, one of which may be the company secretary and two shareholders are also among the minimum requirements for forming a PLC.
- Limited liability partnerships, or LLPs, are corporate bodies whose legal existence generally does not depend on its members. The members of an LLP share a collective or joint responsibility. They usually agree to an LLP agreement, but each partner is not liable to the other partner's debts or obligations as they would be in a general partnership. An LLP has many features in common with a normal partnership - but it also offers reduced personal responsibility for business debts.
- Unlike members of ordinary partnerships, the LLP itself is responsible for any debts that it runs up, not the individual partners.
Setting Up a PartnershipIf two or more people go into a business together without setting up a limited company , a partnership is a simple and easy way to get started. This is similar in many ways to going the sole trader route for an individual.
A partnership has no legal participation in the business, as a Limited Company would; it is like a vehicle linking two or more self-employed people in a simple business structure.
Basically, each of the partner’s business income is counted alongside their existing personal income, so the accounting side of the business will be pretty straightforward. As the name suggests, limited partner has no management authority in the business' day-to-day operations and his or her liability is limited to the amount of investment.
In terms of accounting, you will need to submit an annual self-assessment form to HMRC and keep accurate and up-to-date records of all business transactions (receipts and expenses) and accounts. Each partner will also have to submit an annual self-assessment form regarding the partnership. The partners will also be required to pay income tax on all profits and pay national insurance contributions on those profits.
It is important to remember that if either of the partners withdraws from the business (e.g. in case of death, resign or they go bankrupt), the partnership must be dissolved instantly, since it has no legal status.
Setting Up as a Sole TraderBeing a sole trader is the simplest way to get started in business. A sole trader is a business that is owned by one person. It may have one or more employees. A sole trader informs the government agencies about the nature of his business, and can start trading right away (subject to any specific licenses required in that particular line of work).
As a sole trader, you can quickly make changes in your business with minimal bureaucratic formalities required and you have complete control over your business and accounting affairs. However, a sole trader is liable for any debts that the business incurs. It is worth spending time considering which company set-up format is best for you.
A sole trader business is easy to set up. There are no formal procedures required and operations can commence immediately. It also does not involve dealing with any administrative or accounting firms which are required of limited companies.
If you start working for yourself, you are required to register with HMRC as self-employed, even if you already send in a tax return. There are some exceptions and special rules for particular industries, like the construction industry.
You should register the moment you start working as a sole trader, otherwise you could incur a financial penalty.
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