Company formation or company registration refers to the process of incorporation of an organisation in the UK. The term company formation is used when incorporating a business organisation in the UK, and Republic of Ireland. The words ‘company’ or ‘corporation’ means an entity that is different from the people who run or operate it. In today’s digital world, where all the data is on the cloud, mostly all the UK companies are formed on the same day as it is registered for.
Companies can be registered by an individual, accountant like dns accountants, specialised agent, or a legal representative. Company formation is also possible through paper filing. Forming a company via this method can take as long as 4 weeks.
If you have a new business in mind and want to join hands with over 500,000 people a year turning their ideas and enthusiasm into a new UK company, the very first step in doing so is
The first step towards starting your business is to decide if you want to start as a limited company or as a sole trader. In case you decide to start as a limited company, you need to register your company with Companies House under Companies Act 2006.
Companies House: As the name suggests, it is under Company House where a company is created, renamed, restructured or closed. You can think of it as the birth, marriage and death for companies. More than 3.5 million limited companies are registered in the UK and approx 5,00,000 new companies are incorporated every year. The United Kingdom was the first country to create and maintain such an open and transparent corporate information register and this system allows the general public to monitor and inspect the ownership, actions and reliability of each and every company ( As per Company Act 2006 ) transacting business in the UK.
Company house falls under the remit of the Department for Business, Energy and Industrial Strategy (BEIS) and is a member of the Public Data Group. Companies which are permitted by the United Kingdom Companies Act 2006 should be incorporated and registered with Companies House. The Companies Act 2006 (C 46) is an act of the Parliament of the United Kingdom and forms the primary source of the UK Company Law.
As the official registrar of companies in the UK, Companies house function in three separate countries, each of them having its own registrar. Company registrations for England and Wales are done in Cardiff. The Chief Executive of Company House is Ann Lewis. Registrations for companies for Scotland are carried out in Edinburgh and its registrar is Aoife Martin. For companies in Northern Ireland, registration is done at their Belfast Office and its registrar of companies is Helen Shilliday.
Companies House allocates a unique sequential company number to each new company registered. The Cardiff office allocates 8 digit numbers, Edinburgh companies start with “SC” and Belfast companies start with “NI’. Numbers allocated to them are permanent i.e. they can never change the allocated number even if they change the name of the company.
If you have a new business in mind and decided to start with a Limited Company, then you have to register your company with Companies House by:
You can refer to the checklist for registration of new company for the full list, but the information mostly needed is :
Once your company is registered, you would be required to set up and maintain company books, which include:
There are number of important tasks you will need to consider, which might include :
At present, there are over 3.5 million limited companies incorporated in the UK and are preferred over a sole trader or partnership structure. The private limited structure is a proven successful business model where the business owners hold all shares of the company. Forming a private limited company, results in protection of personal assets, access to more resources, better financial assistance and greater tax cuts.
In the case of a public limited company, you can raise large sums of money because there is no limit to how many shareholders a public limited company can have.
Shares of a public limited company are easily transferable and thus provides liquidity for its shareholders.
Going public can enhance the options for the founders to exit the business at some point in the future, if they wish to do so. Both higher transferability of shares and the increased visibility of the business and its performance may increase the chances of bid interest from potential suitors.
Along with the advantages of a limited company, they have their fair share of disadvantages, such as:
Once you have decided to be your own boss, you then need to choose the best structure for your business, in terms of whether you want to start either as a Limited Company or as a sole trader and the decision should be made well in advance before you start trading. This decision is very much dependent on your future plans and current situation, however, the structure you chose will have an impact on how you pay the relevant tax to Her Majesty’s Revenue and Customs (HMRC).
There are a lot of factors which come into play while you decide on the structure of your business like tax implications, the legal entity, ownership and liability. You can start your business as a limited company or as a sole trader etc. However, the benefits associated with the limited companies are much more than any other structure and it gives you the opportunity to explore more avenues of the financial world.
Whichever path you choose, it is important to understand that it’s not your final decision and you can change it at a later stage. However changing the structure is neither an easy nor a simple task. So, it is highly recommended to take as much time as you want but when you start, you should start with a clear and focused mind.
dns accountants provides fixed fee taxation and accountancy packages for private limited companies, public limited companies, contractors, and freelancers. Our team prides itself on being our clients preferred taxation and accounting partner in the UK and provides world-class accountancy advice and knowledge. Our services include:
Additionally, we help in setting-up a private limited company. This means a company is legally different from the people who operate it; separate financials as compared to a sole trader.
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