7 Steps for Starting U.K. Business

Forming a company in United Kingdom is not a tough job. However there are some rules that you need to follow. In this article we tell you about the basic rules like how to select a name, who are people your company should have etc. If you follow these few rules forming a company in UK should be a breeze

Usually, when people consider opening a business, they walk on the path of forming a limited company or as it is known commercially, a limited liability company. If someone wants to start a business as a sole trader or a sole-proprietorship as it is formally known, then there is comparatively less paperwork. However, a limited company has many long-term advantages and opportunities like reduced tax fringes, increased protection of personal assets and less individual risk, in case the business fails. The article will try to highlight the structures of the company and the procedures of starting your own limited company.

STEP 1:

Finding an appropriate name for your new company. The organization Companies House maintains a list of all registered companies in the UK. All you have to do is check their website and confirm whether the name you have thought for your company is already registered by some other company in use or is available. Whatever name you choose, it must have the word "limited"(abbreviated to Ltd. usually) at the end. For example, "The Ultimate Widget Company Limited or Ltd."

STEP 2:

Next you will have to appoint the two most crucial people of your company- the company secretary and the director of the company. However, it can be your decision to make the company secretary a director as well, but he/she cannot be the only director of the company.

STEP 3:

Thus, usually such responsibility is usually given to someone from the family, like a sibling or one’s spouse. If it is a partnership or a jointly owned family business then usually one person becomes the company secretary in addition to being one of the dire. Usually, the company secretary is indispensable to the company in legal affairs. The person shall be responsible for submitting the annual returns of the company to Companies House and ensuring that the company and its directors operate legally. Another option might be to hire the services of a professional third party firm who provide company secretaries in exchange of an annual remuneration.

STEP 4:

In a limited company, the shares of the company have to be allocated and then floated in the market as the share-owners shall make the company. You will have to decide as to how many shares your company will have and their value. Normally, companies are floated with 100 or 1000 shares with a value of £1 per share. Some of all the shares are issued to shareholders in return for the value of the shares in cash. The shareholders get ownership rights and the right to vote at company meetings. It also entitles them to get dividends on their shares based on the profits of the company. The shares which remain unsold are called unallocated shares. It is suggested that you consult an accountant to make sure that the allocation of shares is done in the most tax efficient way and which is best suited to the particular circumstances.

STEP 5:

The last move you have to make before starting you limited company is the registration of the company’s office as is mandatory under the Company Law. The registered office of a limited company is usually the address where official documents can be served; statutory documents related to the company can be stored for future inspection. Normally, the choice for the registered office address is the home address of either of the company directors or the office of the company’s accountants.

After all these steps, you will have all the information needed to form your company.

STEP 6:

The cheapest and fastest ways nowadays to form a company is to use one of the numerous online company formation services which charge around £30 to £50 to process your application with Companies House and they will send you all the required company documents by email so that you just have to take a print out. If additional fees are given, then they even provide printed copies of your desired documents.

STEP 7:

This is actually an alternative to forming a company from scratch. Instead, you can buy an "off the shelf company". The term is used to denote companies which have been formed by a company formation agent but which has not yet been traded. Such a company can be purchased by paying a fee to the formation agent and have the ownership transferred to you. However, in such cases, you might be limited by not being able to choose your company name as you can only pick from the list of pre-formed off the shelf companies that the formation agent has at that time. There is the alternative of buying the company and applying to Companies House to change its name for a fee.