Setting up a UK company can be time-consuming – and there is a lot to consider. Before you get started, you’ll need to think about the most suitable trading structure, how you allocate ownership shares, insurance coverage, organising a business bank account, and potentially registering for licences and hiring staff.
Whether you have a fully formed business plan or are in the early stages of setting up your own company, a limited company formation package may be advisable, depending on the complexity of your business model and any deadlines you’re dealing with.
In theory, registering a limited company with Companies House is pretty straightforward, but making mistakes during the application process, missing something important from your formation documents or choosing the wrong company type could come with hidden costs later on.
Let’s look at what a company formation provider does, how it all works, and when it is worth hiring an accounting professional to get your business up and running.
What Do Company Registration Packages Include?
The basics are that company registration providers submit your details to Companies House, including choosing a company name, selecting your business category, registering the owners and directors, and providing a registered office address.
Each component of the process will differ, from rapid formations for clients who need an active limited company as quickly as possible to those in niche sectors or for whom company name selection is key to their business model.
For instance, if you have a draft company name but find this is already in use, you might instruct your company formation provider to find the closest possible alternative. If you’re using a firm of accountants, they can also act as your registered office rather than using your home address. The registered office is the point of contact for HMRC communications, tax return reminders and other notices, such as prompts to file your annual confirmation statement.
Companies House also needs a register of the people with significant control. That could be your majority shareholders or another entity responsible for running the business.
Articles of Association and Memorandums of Association
One of the aspects of registering a company that many owners find confusing is the need to submit these two documents:
- A Memorandum of Association is a legal statement that all guarantors or shareholders must sign, verifying that they are starting a company together.
- The Articles of Association cover all the trading rules, administrative structure, rights and responsibilities of the parties that own and control the business.
You cannot register a limited company without either document, although Companies House provides a basic template that may be suitable for smaller companies or those without any complexities in terms of ownership.
However, if you are not the sole shareholder of your new limited company, it may be worth editing the articles to ensure these are specific to your business, and the agreements made between owners.
For instance, if you launch a business and invest personal assets as start-up financing, you may need some assurance or protections built into the incorporation documents from the outset. If you need help writing a self-created set of articles, a company formation provider who is also an accountant can act as an adviser and guide you through the process.
Why Is a Business’s Trading Structure Important?
There are multiple potential ways to start a business. While registering a limited company involves a simple online application form, it is often the planning before this that makes a difference.
Picking the right structure is essential since this determines your exposure to business debts and how liable you may be if the newly registered company becomes insolvent at some point.
As a quick overview, a UK company might be:
- A limited liability partnership (LLP): where partners go into business together and have their liability for business debts limited based on the partnership agreement.
- An incorporated limited company (LTD): this company structure is limited by shares, where shareholders each own a proportion of the business. Limited personal liability is linked to the amount of shares each person owns.
- A public limited company (PLC): these businesses are publicly traded on the stock market, where members of the public can buy and sell shares. This type of company is normally much larger and more established.
- A Special Purpose Vehicle (SPV): some sectors use specific trading structures. An SPV is like a limited company (LTD) but is designed for landlords and property professionals who are incorporating a business to manage property transactions.
Note that this is not an exhaustive list. You might ask a company formation provider to register a company that is limited by guarantee, a popular service for non-profit, charitable and community organisations.
Limited liability protection might not be something you view as a critical priority now. Still, it may make a significant difference to the loss you potentially stand to make if the business doesn’t succeed.
What Are the Advantages of Using a Professional Company Formation Services?
If you are confident you understand the company formation process, which trading style is right for you, and have a set of incorporation documents that accurately represent your business structure, you can register a company online. There is no obligation to consult an accountant or hire a company formation service to do this for you. The Companies House registration fee is £12.
However, if you have any doubts, need to set up a company today, or need advice on picking the right type of business with tax efficiency in mind, a company registration service offering a comprehensive service may be advantageous.
Registering for All Applicable Taxes
Most UK companies need to register for several taxes, depending on their projected turnover, area of trade, and whether they intend to hire employees.
An accountancy team offering company formation packages will deal with everything on your behalf, from VAT to PAYE, setting up auto-enrolment pensions and monthly payroll processes, ensuring you know when to pay Corporation Tax and have included all taxes and liabilities within your budgets.
The Assurance of Setting Up a Company Hassle-free
Setting up a UK limited company can be straightforward, but there is an associated workload if you need to spend time researching, creating your own registration documents, or comparing different trading structures to ensure you make informed choices.
We deal with the company application from end to end, offering guidance and support to ensure you have full oversight and can concentrate your time and energy on running your new business or marketing your brand to prospective customers.
There is minimal potential for Companies House to reject the application – something that commonly happens if there is a mistake, however small, on your registration paperwork.
Access to Additional Services
Finally, a company formation service can provide extra support whether you need a full accounting service or assistance with business planning and financing.
Please contact the James Todd & Co team at your convenience for any further information about company formations.