The UK remains one of the best places to do business, encouraging local entrepreneurship and foreign investments. Access to cutting-edge technology, robust IP protection, and financial incentives are only a few reasons the UK is a business hub.
However, before you commence operations, you are required to register your business legally.
Registering a business in the UK is a multifaceted process that requires careful execution. During this procedure, you must give accurate information on your business operations and the individuals involved. Legal incorporation comes with numerous financial and security incentives for all business structures.
There are six main steps to legal company formation in the UK. In this guide, you will learn what they are and how to perform them without complications.
1. Define Your Business Structure
Whether you intend to run a business alone or join forces with others, there’s a company structure that fits your profile. During incorporation, you must choose a company structure that accurately defines your business model and objectives.
The Companies House recognizes various business structures. You can register your company as any of the following:
- Sole Trader: Run by a “self-employed” individual with complete control and liability.
- Partnership: Established by at least two people who run and share profits and losses.
- Limited Liability Partnership (LLP): A partnership where the liability depends on the investment or contribution of each partner.
- Overseas Company: A business with a measure of physical presence or an office in the UK.
- Franchise: A business authorized to operate under the name or model of an existing UK company.
- Community Interest Company (CIC): Organizations established primarily to support the community, where most proceeds go into community development.
2. Select a Unique Business Name
Every legal entity in the UK has a unique name. Likewise, you must have a name ready to kickstart your company formation UK.
There are rules for naming a business for incorporation in the UK. First, the name must be unique. This implies it must not be the same or similar to an existing legal entity in the country.
In addition, the name must not be offensive or discriminatory to any group or demography.
Further, the name of a registered limited company must end with “Limited” (or “Ltd” for short). Meanwhile, names of businesses registered in Wales will end with “Cyfyngedig” or “Cyf” (the equivalent of “Limited” or “Ltd”).
While you may have brainstormed a fitting name for your company, it is advisable to have multiple options. That way, you can avoid setbacks that may delay your UK company formation. Use the online company name checker to learn the availability of your preferred business name. If the result shows that the name is not in use, you may register it.
3. Secure Your Documents
UK company formation involves a fair amount of paperwork. You will be required to submit valid documents upon incorporation. These documents include information on the business model and individuals running the company.
Two documents are crucial to incorporating a business in the UK: the Memorandum of Association (MOA) and Articles of Association (AOA).
The MOA is a signed agreement by the organization’s core members, including the director, secretary, shareholders, or guarantors. This document contains the signatures of all stakeholders agreeing to establish the organization and its roles. It details the powers and responsibilities of core members, including terms for appointment and removal.
Meanwhile, the AOA details the company’s bylaws or how it will be run. It includes the rules for operations, including hiring, financing, and appointing representatives. The Companies House offers a “model” version of these documents to ease registration for companies.
In addition to the aforementioned, you may submit copies of these documents.
- Valid visa and passport of the business owner
- Proof of address
- Personal data of shareholders, guarantors, and other people with significant control
- Bank account information
- IN01 form (incorporation by post)
4. Identify Directors and People with Significant Control
Legal entities in the UK must have at least one director and a shareholder (or guarantor for non-profit organizations). For some business models, a company secretary is another role that must be identified upon incorporation.
An individual can bear the roles of a shareholder and director of the organization. This is common in sole proprietorships.
Meanwhile, the business owner or people with significant control appoint or remove a director in larger corporations. People with significant control in a company are typically directors, shareholders, or guarantors. Individuals with at least a 25% share also fall into this category.
Identifying these individuals and their roles enables you to prepare your memorandum of association and articles of association for registration.
5. Register with the Companies House
The Companies House is authorized to incorporate and dissolve companies in the UK. Thus, every organization must register with this government agency regardless of size or structure.
Incorporation with the Companies House is a straightforward process you can complete in less than 24 hours, depending on your approach. Here are the three common ways to register your UK business with the Companies House.
Online
It is the fastest and most convenient process. Visit the Companies House’s online platform to register on the web. It typically takes less than 24 hours to incorporate your business through this means. At £50, online registration is also the cheapest option.
Post (mail)
If you prefer the traditional incorporation method, you may opt for the post option. Send your documents, including the IN01 paper form, to the Companies House’s post office box for processing. This process costs £71 and takes 8-10 days to complete.
Company Formation Services
The business incorporation process can be overwhelming, especially for non-UK residents or citizens. To facilitate this procedure without complications, consider working with a company formation service in the UK. All you need to do is fill out the incorporation form online with the necessary documents and leave the rest to them.
6. Apply for Corporation Tax
Besides incorporation, businesses must also apply for corporate tax registration. This allows your company to be evaluated and taxed properly by the government. You can apply for corporation tax while registering your legal entity with the Companies House.
If you can’t complete the corporation tax during incorporation, you may attempt it after formation. However, after company formation, your corporation tax application will be processed by His Majesty’s Revenue and Customs (HMRC).
Takeaway
The UK remains an attractive destination for establishing businesses. However, you must legally register your company to avoid non-compliance penalties and enjoy incorporation incentives.
Choose a business structure that suits your operations and a unique name to commence incorporation. Upon filling out the form, ensure your relevant documents contain accurate details of your company model and people with significant control.
UK company formation is a simple procedure you can complete online in 24 hours or less. Alternatively, hire a company formation service to avoid errors that may delay your corporate goals. Contact a UK company formation expert today.