Understanding the Company Formation Procedure in the UK
Companies and businesses are formed in the UK based on the 2006 Companies Act that is also supported by the insolvency act of 1986. Under this act, which is the European Union and the UK’s Corporate Governance Code, a company is responsible for running and administering a business. There are mainly two types of companies;
- Private owned companies
- Public limited companies
For a better understanding of both types of companies and their formation procedures, the below information is quite helpful.
Private Owned Company
The private-owned companies are owned and formed privately by a few individuals in a separate legal entity. In such a case, the shares of the company are untradeable publically. Such companies bound their number of shares, and a shareholder is not allowed to sell his shares without the approval of the other shareholders of the company. Furthermore, a privately owned business does not invite the public to subscribe to its shares.
Such kind of businesses is also known as limited companies that are very common in the United Kingdom and easy to form. You can opt to form them online by using the support of an accounting firm like us, lawyers, through a registered company formation agent, or you can go directly via Companies House. Using the services from 101Accountant to form a private limited company is quite affordable and easy.
In this regard, you just have to fill your company details in our online company search engines. It will help us determine the availability of your selected company name. It will take just a few seconds. We offer multiple company formation packages for you and allow you to pick the one that suits your business and budget very best.
Public Limited Company
Contrasting to private companies, a public limited company is best known for offering shares in the public. Here is one thing that is interesting to note that these companies were too initially formed as private-owned ones to get listed on the London Stock Exchange or Alternative Investment Market. Unlike private-owned companies, they have a significant interest in the public. They need a long list of compliance to assist them in getting public interest.
It is noteworthy that public limited companies are not bound to sell their shares or enlist themselves with any of the stock markets. It is easy for you to convert the status of your company from private limited to public limited or from public limited to private limited.
Benefits of Establishing a Private Limited Company
- Running a privately owned company gives protection against personal liability. In the case of business failure, your personal assets will be safe.
- By starting a private limited company, it becomes easy to get loans, boost capital, and improve financing opportunities as the company increases your credibility and minimizes personal risks.
- A Private Limited Company is a lawful entity, and its assets do not get muddled with your personal assets.
- Devouring the responsibility of running a limited company raises customer and supplier trust in your business.
- Private companies are administered by a structure that monitors the stockholders and the executives in regulating their interpersonal and corporational affiliations.
- The lifetime of private companies is indeterminate, and their presence doesn’t end with the death of the shareholders or directors.
- There are multiple tax benefits linked with running a private limited company in the UK.
- The structure of private limited companies is appropriate for both non-profit and profit business entities.
- Limited company formation in the UK is economical and simple yet a sensible method of shielding the business name.
Benefits of Setting-Up a Limited Company
The procedure of establishing a limited company is complex, and it becomes tougher when you couple that with the administrative and financial responsibilities. In comparison to the sole trader business structure’s requirements, setting us a limited company is a way cost-effective and straightforward. Although numerous advantages are associated with starting a limited company, you can make choices on the basis of your current circumstances. The following are the benefits of a limited company;
- Being the owner of a limited company, your personal assets are secure in case of recovering business losses.
- Unlike partnerships and sole proprietorships, private limited companies provide you with a clear picture of the nature of business and also empower the credibility of business owners to access banks, investors, creditors, and financial organizations for investment funds.
- Managing a limited company benefit, you have access to an unending range of affordable finances that always come in terms of ordinary and preference shares from the stock market. It becomes more efficient if your company is publicly listed. Furthermore, you can easily enlist your business with multiple stock exchanges around the world to amass massive funds worldwide.
- Running a company also provides you with the opportunity to be levied a corporate tax. Numerous tax benefits are also linked to running limited companies.
- A company upsurges suppliers and customers’ loyalty since there is a long-term guarantee to the business, unlike partnerships and sole proprietorship.
- Your level of competence rises since many big companies choose to do business with companies instead of sole proprietors or partnerships.
- As soon as you have your company name listed by the Companies House, you automatically become safe by the law as no other business can use the name or come up with a term closely linked to yours. This makes it tough for your rivals to mimic your merchandise and services, and even though they do, your faithful customer base will always be capable of telling the dissimilarity by comparing business names.
- Devouring a limited company makes it easy for you to sell shares within the firm or handover your ownership right through the vending of the shares to your fellow shareholders.
Requirements for Cheap Company Formation in the UK
Choosing the company name
As soon as you make your mind to form a limited company in the UK, you must be giving it a name that can differentiate it from others and for registration with the Companies House. The name of your company should be ending with “Ltd” or “Limited.” Once you provide us with the proposed name of your business, we will be running it through our database in order to determine that it is unique and is not taken by any other company. There can be some cases that despite the availability of name, Companies house refuse to register the company like;
- Name sounds offensive
- It is misleading, confusing, or misuses the name ending.
- It comprises restricted characters, signs, and symbols, or punctuation marks
- It holds any sensitive expressions or words
- It has a close link with any of the local or the central government or any public authority
After running multiple checks on your provided business name, if we find some doubts and issues, we will contact you and will suggest appropriate necessary changes.
Upon the formation of a private limited company, you are essentially required to issue at least one share. However, there is no constraint on the number of shares the business can have or the worth of each share.
The accounting period of a private limited company starts within the first day of incorporation. Validate that you uphold your company books and accounts in an exact manner as you will be obligatory to file your financial reports within 9 months after the culmination of your limited company’s economic year.
A Registered Office for Your Company
You should have an office for your company in the county of your company’s incorporation. However, the office doesn’t inevitably stand for the address of your company and could be that of your attorney or accountant. The address is essential since it is someplace where all government communications and mails will be sent. Furthermore, all the official letters of the company must hold this address.
Requirements for Ltd Company Formation
Since the company formation process is complex and can be tough for you if you do not have any prior knowledge of the procedure, you need to have the assistance of the best company formation service providers to help you comprehend the requirements to complete the process without any hitches. 101Accountant is there to help you in every aspect of the company formation and to provide you with credible and trusted agents. You just have to fill in the details of your potential company on our online registration system, and we will be making it easy to get your business registered with the Companies House.
The establishment of the limited company in the UK is easy from the time when the government has made exertions to eliminate all the administrative barriers that might mark it difficult to form a business. With that assumed, the following are the least requirements to meet for establishing a limited company in the UK.
- The company should have at least one employed director
- The directors should be at least 16 years old
- The company should have a registered address in the UK
- The company should have a distinctive name that is in no way alike or closely connected to any other business listed by the Companies House.
- The company should have one naturally hired director
- Limited companies in the UK do not essentially need to have the secretaries, shareholders, and executives based in the UK, but you should make sure that you have somebody who is at least 16 years hired to be based in the UK.
- If you are administering a private limited company, employing a secretary is discretionary, depending on either you want somebody to support you in administration or not.
- Business bodies can act as directors, secretary, or shareholders of the limited company. At the same time, you should have another natural individual who functions as the director.
- When establishing a limited company, you can utilize the home address of any natural director while registering the company. However, you should be aware that the address will be publicly registered on the Companies House’s website. To maintain the confidentiality of your or your directors’ home address, you can have a private address service for the business, which you can refurbish on an annual basis.
Legal Documents You Receive from Us after Registering Your Company
We offer you inexpensive company formation services and make you available with all the essential documents obligatory for running a limited company. After enlisting your company with the Companies House, we afford you with the following documents;
Memorandum of Association This document lists the primary shareholders establishing the limited company.
- Certificate of Incorporation
This is the legal paper that displays you have shaped a corporation. The paper acts as evidence that the company has been founded under the 2006 Companies Act.
- Articles of Association
This document entails the guidelines that bind the company associates in order to confirm the smooth functioning of the company. The modifications in this paper are only potential if the shareholders use their voting rights.
- Statement of Capital Holding
This document summarizes the address of the registered company, the names and addresses of the company directors, and the amount of the share capital of the business.
Once these documents are prepared, they are forwarded to the registrar of Companies House for further processing. Once the formation procedure is done, the board holds its first get-together, where they formulate the register covering information on the company directors and the shareholders. This information is restructured on a regular basis to make sure any vicissitudes are recorded.
Why Should You Choose Us to Help You with Company Formation?
The whole company formation process is complex and particularly if you don’t know where to start or how to go with it. Luckily, 101Accountant has a team of experts who are familiar with the whole formation process.
We take the whole formation and registration procedures in a practical manner, and our first step, while you reach us, is carrying out a practicability study on your business. From that study, we make you available with a comprehensive report that benefits you to comprehend both financial and non-financial benefits you will grasp from establishing the company.
We then examine the nature of your company and help you come up with a vendible and distinctive name for your business. We make sure that the name conceals all characteristics of your products and services and is also striking to your impending customers. Finally, our specialists in the legal context work hard to make sure you get all the obligatory papers within your deadline and that your business is up and functioning as you had expected.
After your limited company is functional, you can trust us for other services such as taxes and accountancy services. Since we are with you from the commencement of your business, we have a superior understanding of your company and can, therefore, offer standard services that will ensure the success of your company.