Registering a New Company in the UK
According to the latest statistics, almost 500,000 new businesses are launched in the United Kingdom every year. In total, there are more than 4.8 million businesses registered in the country. New business registration is an essential step for most entrepreneurs, but understandably, the process might seem daunting to first-time business owners.
Why Register a Business
According to British law, company registration is a legal requirement in the majority of cases. But there are additional benefits associated with registering a company that business owners must not overlook. In the first place, having a duly registered company helps improve the reputation of a business among potential clients, suppliers, and lenders. Moreover, and since business registration is closely linked to taxation, owners of a registered business can benefit from the relevant tax deductions. Owning a registered business is also a basic eligibility requirement when it comes to applying for different types of funding.
Who Should Register
When a new business is founded, the owner/s needs to decide on a business structure. In the UK, the three most common types of business structures are sole tradership, business limited partnership, and limited liability companies. Sole traders are self-employed individuals who are solely responsible for their business. The law does not require sole traders to register their business, although they must register for tax self-assessment with HM Revenue and Customs.
Another option is to set up a business as a limited partnership. In this case, legal responsibilities are shared by more than one person. The third type of business structure is the limited liability company, which requires a more complex set up and where the personal assets of the owners or shareholders are protected. Both limited partnerships and limited liability companies are required by law to register as operative businesses in the UK.
Registering a Company in the UK: the Procedure Step by Step
New businesses that are required to register must do so with the Companies House. This organisation acts as a national registrar of companies and is responsible for incorporating, dissolving, and storing information relevant to the companies registered. Many first-time business owners are unsure as to whether it is necessary or not to use the services of a solicitor or an accountant in order to register their business. While individual circumstances may vary and self-registration is possible, it is highly recommended to use specialist help in order to avoid long-term problems or unnecessary delays.
In the case of limited business partnerships, the first step is to fill and sign a Memorandum of Association, in which partners state their intention of forming a company. Pro-forma memorandums can be downloaded from the Internet, obtained from a company formation agency, or from law stationers. Next, partners must fill in and sign the registration application (which is also known as form LP5). This can be downloaded from the Companies House website. It is important to note that registration forms should be sent to the relevant office, as the registration offices in Cardiff, Edinburgh, and Belfast oversee different geographical areas. Once the registration is approved by the Companies House, the partners will receive a certificate of registration issued by the Registrar.
Limited liability companies must also fill in a Memorandum and Articles of Association. It must be noted that there are two different types of memorandums available, depending on whether the company has share capital or not. Submitting the wrong type of memorandum will result in the application being rejected. It is also essential to choose the adequate type of articles of association, which may be copied in their entirety from the templates provided, copied with amendments, or be completely bespoke articles. In addition, at least one director and one shareholder must be appointed.
The registration of limited liability companies is also known as incorporation. This process requires that business owners fill in form LL IN01, where details about the business share capital, directors, and shareholders must be provided.
Both limited business partnerships and limited liability companies must pay special attention to the name given to their business, as there are several rules and restrictions that apply. To avoid complications, it is recommended to check company name availability at http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo
Costs and Timelines
The cost involved in registering a company is set at £40, although same day registration is possible by paying a fee of £100. Online registrations are available at a fee of £15. Registration applications that are submitted online take 48 hours to be processed, while applications sent by post may take between 8 and 10 days.
Companies House - http://www.companieshouse.gov.uk/infoAndGuide/companyRegistration.shtml
HM Revenue and Customs - http://www.hmrc.gov.uk/businesses/iwtregister-a-new-business.shtml
Office Space and Office Facilities in London - http://www.offices-london.com