How to Start a Business (Limited Company)

8 steps to set up your limited company 

These steps will ensure you are compliant and correctly set up with the UK government as a limited company. You can operate as a sole trader which just requires you to register differently with HRMC.

1. Decide if forming a limited company is right got you 

Advantages of setting up as a limited company include; limitation of personal liability, professional status, beneficial tax efficiency and planning. However, drawbacks include; needing to do a more administration, publish your personal details publicly and you will have legal accounting requirements as a limited company. If you are looking to commit to a full-time, more professional venture that you will invest substantial time and effort in growing forming a limited company is a great option.

2. Register your business 

There are several steps to registering your business officially with the government, for advice and help with the process you can use a formation agent. They will save you time, money and stress so you can get to the fun part of running your new company! National Business Register have over 35 years experience forming companies, read more about their services here. You will need to decide on the name of your company, who and how many directors you will have and how many shares each director will have.

3. Employing someone as a limited business 

You will need to pay income tax and National Insurance contributions for each employee so will need to set up a PAYE. This government resource is a good directory for what you will need to cover if you have employees, it also takes you to details regarding your tax self assessment form – get bookmarking!
In terms of employment law – know your basics. A great site for basic legal documents is Rocket Lawyer.
ACAS is a goldmine of informative articles on everything from employment law to workplace Covid advice.
If you’re looking to contact a solicitor our accredited partners, Thursfields have the experience and legal expertise to guide you throughout the life cycle of your business. Read more here.

4. Get an accountant 

It is advisable you get an accountant as a limited business. You are legally required to submit yearly accounts to HRMC alongside your self-assessment forms and Confirmation Statements. Ask friends, fellow business owners and find out more about our accredited accounting partner, Stewart Associates, here.
Remember to keep organised and maintain detailed financial records of everything to do with your business. It may be boring and the last thing you want to do at the end of a busy day but future you (and your accountant!) will love you for doing it. Download your accounting software to your phone to keep organised even on the go.

5. Do you need to register for VAT? 

If your businesses turnover exceeds £85,000 per annum you have to be VAT registered, register here. If you are under this threshold registering is an extra process however it does mean you can claim VAT back on goods and services you use for your business. If you are setting up as a limited company you are probably quite serious about making a go of your business so if you don’t register for VAT (which gives you the ability to claim VAT back on items purchased for your business) you are effectively paying 20% more than you should for anything that includes VAT (which is most things). Just remember to keep those receipts!

6. Understand your tax 

Tax is one of the main factors that sway people to form a limited business. As a sole trader you can pay between 20%-45% tax on your profits whereas a director of a limited company will pay 19%. However don’t go mad spending 81% of your profits, there are other costs, especially with employees (see point 3) limited companies are responsible for. This is where having an accountant comes in really handy. Also having accounting software such as Xero, QuickBooks or Sage will keep things organised on the go.

7. What insurance do I need? 

There are legal requirements for insurance but this decision is also influenced by the type of business you have and how much ‘peace of mind’ you want to pay for. We’ve outlined a few basic forms of insurance below to get you started.
Employers Liability Insurance – this is the only legally required form of insurance for a small business owner. This is to cover any employees that are injured whilst working for you. If you operate with no insurance and have staff working for you, there can be a penalty of £2,500 per day.
Management Liability Insurance (Directors’ and Officers’ Liability Insurance) – this covers the individual directors personally rather than the business as a whole. This can be helpful if things do go wrong as directors are open to having claims of malpractice brought against them with potential fines, disqualification (this will mean you won’t be able to be a director of a future company) and even prison sentences. When taking out this insurance check your policy covers insolvency and large shareholders (over 15%) as many policies do not protect you in these cases.
Public Liability Insurance – this is to cover customer injury. Accidents do happen and not having this insurance if you have a shop/salon etc could be costly. Also note some clients and suppliers may request you have this insurance as part of your contract with them.
Contents and Portable Equipment Insurance – this covers all the technology and physical belongings you use to operate your business. If you are running your business from home and have contents insurance it’s worth checking the wording of your policy as some do not cover equipment used in a commercial capacity.
Professional Indemnity Insurance – this is for businesses that offer advice or consultancy services. This insurance will cover you if a client of yours makes a claim against you stating they have incurred financial loss after acting on your advice. In these industries clients may insist you have this form of insurance and it will help bolster your professional reputation if you do.
Cyber insurance – this will insure you against any claims made if you have a data breach. You should consider this insurance if you hold large amounts of customers data and/or sensitive customer data. This may become more important as you grow and will be valuable to have as you build the data on your customers to optimise your marketing strategy and potentially increase your product/service offering.

8. What are your responsibilities as director? 

The term director does come with some legal responsibilities. Alongside ensuring your business is compliant e.g. has licenses with the local authority and/or the correct insurance for your employees there are some actions you will need to do.
Ensure your corporation tax is paid
File annual accounts with HRMC
Write the companies ‘articles of association’ when you form the company and then follow them. These can be updated after registering
Keep detailed company records and report any changes in a timely manner
Notify other shareholders if there is a possible conflict of interest where you will personally benefit from a purchase the business makes
If you follow these steps you will have a compliant and solid foundation from which to grow your business. If you’re still unsure, we’ve outlined the main differences between being a sole trader vs limited company for you. Alternatively if you’ve decided becoming a sole trader is the best option for you read our guide on how to set up as a sole trader here.

How to Start a Business (Sole Trader)

7 steps to set up your business as a sole trader 

These steps will ensure you are compliant and correctly set up with the UK government

1. Decide if being a sole trader is the right set up for you 

76% of businesses in the UK are sole traders and this is how many people setup. Advantages to being a sole trader include; keeping things simple in terms of administration, you can employ people and it’s a relatively straight forward process with HRMC. However, there are also draw backs; you will be personally liable for any debts the business incurs and will have limited access to external finance options. If you are just starting out and are setting up a low-cost business becoming a sole trader is a great option.

2. Register with HRMC 

Once you have decided you are going to operate as a sole trader you will need to let HRMC know by registering for a self-assessment tax. HRMC will then send you a letter with your 10 digital Unique Taxpayer Reference (UTR) which will allow you to go online and set up your account.
If you have done a tax return online before grab you UTR (unique taxpayer reference) and fill out this form – CWF1. If you’ve forgotten your UTR find it here.
If you have a business that you run alongside being employed by another company it is still worth looking into whether you should register. The Gov website has a test page here. Alternatively speak to an accountant for advice, more on that later.

3. What to do if you employ someone as a sole trader 

A common misconception of being a sole trader is that you can’t employ people however as long as you have the correct set up you can. You will need to pay income tax and National Insurance contributions for each employee so will need to set up a PAYE. You will need to pay income tax and National Insurance contributions for each employee so will need to set up a PAYE. This government resource is a good directory for what you will need to cover if you have employees, it also takes you to details regarding your tax self assessment form – get bookmarking!
In terms of employment law – know your basics. A great site for basic legal documents is Rocket Lawyer.
ACAS is a goldmine of informative articles on everything from employment law to workplace Covid advice.
If you’re looking to contact a solicitor our accredited partners, Thursfields have the experience and legal expertise to guide you throughout the life cycle of your business. Read more here.

4. Get an accountant 

You can do your books yourself however unless you particularly enjoy this aspect of running your business getting an accountant is not only a good idea, it’s essential. When you are just starting out and trying to keep costs low it may seem like an unnessccery outgoing however if you make a mistake, file something incorrectly or just miss something from HRMC having an accountant is a life saver. Ask friends, fellow business owners and find out more about our accredited accounting partner, Stewart Associates, here.
Remember to keep organised and maintain detailed financial records of everything to do with your business. It may be boring and the last thing you want to do at the end of a busy day but future you (and your accountant!) will love you for doing it. Download accounting software to your phone to keep organised even on the go – Xero, QuickBooks and Sage are all popular and user friendly solutions.

5. Do you need to register for VAT? 

If your businesses turnover exceeds £85,000 per annum you have to be VAT registered – register here. If you are under this threshold registering is an extra process however it does mean you can claim VAT back on goods and services you use for your business. Don’t forget to keep those receipts!

6. Understand your tax 

This is where the accountant will come in useful however a good rule of thumb is put aside 25% of your income. Don’t touch this until the end of the financial year (sole traders need to pay their tax for the previous year by the 31st January every year) and you should be golden. Alongside your income tax you will have to pay National Insurance Contributions throughout the year. Here are the thresholds
Annual profits below £9,568 (2021/22) = £3.05 per week.
Annual profits between £9,568 and £50,270 = 9%
Annual profits over £50,270 = 2%

7. What insurance do you need? 

There are legal requirements for insurance but this decision is also influenced by the type of business you have and how much ‘peace of mind’ you want to pay for. We’ve outlined a few basic forms of insurance below to get you started.
Employers Liability Insurance – this is the only legally required form of insurance for a small business owner. This is to cover any employees that are injured whilst working for you. If you operate with no insurance and have staff working for you, there can be a penalty of £2,500 per day.
Management Liability Insurance (Directors’ and Officers’ Liability Insurance) – this covers the individual directors personally rather than the business as a whole. This can be helpful if things do go wrong as directors are open to having claims of malpractice brought against them with potential fines, disqualification (this will mean you won’t be able to be a director of a future company) and even prison sentences. When taking out this insurance check your policy covers insolvency and large shareholders (over 15%) as many policies do not protect you in these cases.
Public Liability Insurance – this is to cover customer injury. Accidents do happen and not having this insurance if you have a shop/salon etc could be costly. Also note some clients and suppliers may request you have this insurance as part of your contract with them.
Contents and Portable Equipment Insurance – this covers all the technology and physical belongings you use to operate your business. If you are running your business from home and have contents insurance it’s worth checking the wording of your policy as some do not cover equipment used in a commercial capacity.
Professional Indemnity Insurance – this is for businesses that offer advice or consultancy services. This insurance will cover you if a client of yours makes a claim against you stating they have incurred financial loss after acting on your advice. In these industries clients may insist you have this form of insurance and it will help bolster your professional reputation if you do.
Cyber insurance – this will insure you against any claims made if you have a data breach. You should consider this insurance if you hold large amounts of customers data and/or sensitive customer data. This may become more important as you grow and will be valuable to have as you build the data on your customers to optimise your marketing strategy and potentially increase your product/service offering.
If you follow these steps you will have a compliant and solid foundation from which to grow your business. If you’re still unsure, we’ve outlined the main differences between being a sole trader vs limited company for you. Alternatively if you’ve decided forming a limited company is the best option for you read our checklist on how to set up a limited company.

Sole Trader vs Limited Company

What are the pros and cons of setting up as a Sole Trader vs a Limited Company? 

We’ve gone through the basic considerations for both and directly compared them so you can get a clearer picture on which is best for you. Areas to consider when setting up your business include:
Financial Liability
Status & Professionalism
Finance Options
Publishing Personal Details
Business Name Protection
Tax Requirements
Administration Requirements
Employment
Insurance
Sole Trader 
Limited Company 
Financial Liability 
If your business runs up any debt you are legally required to cover it, this may mean even selling personal assets.
Financial Liability 
By setting up a limited company your business becomes a separate legal entity. Therefore if the business does run up debts the business, rather than you personally, are responsible.
Status 
You can build a great reputation as a sole trader and many customers won’t know the legal ‘status’ of your business or, to be honest, care! They are there for your amazing products and service after all.
Status 
Having said that, some suppliers & clients may feel more secure dealing with a company that has gone through the formation process. Once you get larger and becoming more prominent it may be time to form a limited company.
Finance Options 
Along with being financially liable for the business, raising funds may be more difficult. Options as a sole trader include; savings, friends & family lending, go fund me pages, and some banks will loan you money however you may be considered too ‘high risk’ and refused. But if your over-heads are low and your cash flow good this may not be a concern for you.
Finance Options 
You will have more financial options open to you and be more likely to be approved for a loan from a bank or lending organisation. All the options of a sole trader will be available to you along with more official routes. If you need a premises to operate from, need to buy equipment or require some start-up cash to get you going forming a limited company will make it easier when applying for finance.
Personal Details 
Increased privacy. Your personal details won’t be published on Companies House.
Personal Details 
You will have to publish your name (as a director), the names of fellow directors and your business address on Companies House. You can limit the amount of information out there by registering with a secretarial business service eg business address but some details have to be made public.
The Name of Your Business 
Business name protection. As a sole trader you may be worried about others operating with a similar name to take advantage of your good reputation, advertising efforts and word of mouth promotion from customers. You can take out Business Name Protection here with NBR to stop this from happening.
The Name of Your Business 
No one can use the exact same business name as you, they legally won’t be able to form the company. However this doesn’t cover you in every situation, they could add an ‘s’ to the name or ‘solutions’ etc so their name ends up being very similar to yours. You can take out business name protection to stop this, find out more here.
Tax 
Tax can be substantially higher for sole traders, especially when you’ve established the business and are pulling in a good amount of money. Sole traders can be charged between 20%-45% tax on their profits (minus allowable business expenses).
Tax 
Tax for limited companies is lower and they are generally considered more ‘tax efficient’. They are required to pay only 19% on their total profits (minus allowable business expenses).
Administration Requirements 
There is less paperwork to do as a sole trader. You will still want to have an accountant but in terms of legally required documentation there’s less than a limited business.
Administration Requirements 
More paperwork to do with legal annual documentation having to be submitted. As with being a sole trader getting an accountant is a great idea, they will be able to help you with all the paperwork and requirements.
Employment 
You can employee people as a sole trader. Make sure you have insurance and are set up correctly with a PAYE scheme and pensions with HRMC. This is were an accountant will come in handy.
Employment 
As with a sole trader you need to set up a PAYE scheme with HRMC for any employees you have and take out the right insurance to cover them.
Insurance 
As a sole trader you are less likely to have to need different kinds of insurance but check out our ‘Sole Trader’ article where we outline the basic forms of insurance to consider.
Insurance 
As a limited company you may want to take out insurance. We have covered the basic forms of insurance in our ‘Limited Company’ article. One to particularly consider, as a limited company, is individual director insurance.
We hope our battle of the businesses has helped you make the decision which is best for you. Remember the hardest part is taking the first step, get out there, even if everything isn’t perfect and try!
Start.Biz have packages to suit any size and type of business. Get in touch here with our friendly, expert team today to discuss your personal circumstances and set up a solid infrastructure for your business.

What Should I get Legal Advice on as a Small Business Owner?

We’ve consulted our legal experts and complied the 5 areas of what the essentials are for business owners when it comes to legal compliance and safeguarding.  

There are other areas you may look into depending on your particular industry but this covers the fundamentals.

1. Intellectual Property (IP) protection 

Protecting your businesses intellectual property can come in many different forms and should be done as early as possible when setting up your venture. It’s also essential you check you’re not infringing on anyone else’s IP accidentally. Types of IP protection include:
Business name protection – when another business copies your name or has a similar name and / or branding to you, even if your company isn’t limited, this falls under common law and is called ‘Passing Off’. You can take action against the other business if you have prove they have caused you financial lose.
Limited Formations – by forming a limited company no one can form a limited company with the exact same name as you after you have registered. However they can register a company with a very similar name, still causing confusion with customers and therefore you can take out business name protection for your limited company to assist you in this case.
Trade marks – can be words, names, initials, logos, monograms, shapes or signatures, numerals and designs customers associate with your business.
Watching services – these are conducted once you have taken out a trade mark and contest any new trade mark applications that may infringe on your registered mark. Without a watching service your trade mark may become compromised and end up invalid.
Registered design – protects the appearance, physical shape, configuration and the decoration of products whereas trade mark registration protects the names of your products or brands.
National Business Register, as part of Start.biz, offers services that cover all of the above. We have more than 35 years experience protecting businesses and brands. Click on each service to apply or contact us today for advice.

2. HR 

Setting clear guidelines and rules between yourself and any employees from the out set will help keep you both on the same page. Please note the below is based on an employer/employee PAYE agreement, not when instructing freelancers, contracts, sub-contractors etc. We will cover those separately.
This process will not only manages expectations, on both sides, but can legally protect you in the future. You’re wording and ethos should be consistent throughout these documents alongside adhering to statutory employment law. You can find templates for most of these documents online, and some of them are free, we’ve liked to a few sites for you. Alternatively you can hire HR freelancers to help you set everything up or advise on a particular issue.
Job Description – this can be written for advertising the role you’re employing for but the internal one will be more detailed. When writing this to attract applicants you may keep it top line and add some extras about company ethos however the internal job description will go into a lot more depth about the role and not include things like the applicant must love dogs or make an amazing cup of tea!
Offer Letter – this should clearly state title of the role, company name, salary or pay, bonus scheme if applicable, basic holiday allowance, required start date and notice period. This should be sent as soon as the decision has been made to employee an individual.
Employment Contract – this should be drawn up and given to the employee whilst they are waiting to start with you or on their first day. It’s good practice to let them have a few days to read through it and discuss any questions. This is where you need to make sure you are compliant with the law so having a template and doing a little bit of research is good.
Disciplinaries / settlement agreements – these should be covered in the above but we wanted to mention them separately as they are important. Of course, you don’t want to think the worst and wouldn’t employ someone you thought you would have disagreements with but it happens. Having clear steps set up for bringing grievances and disciplinaries will make awkward situations easier to navigate. Also informing the employee and knowing the law when it comes to letting people go is essential.
Company handbook – this is where you can go into more detail about your policies and terms within the contract.
Template resources – 

3. Shareholder agreements comprising of Shareholders Agreements, Memorandum and Articles of Association 

This is clearly setting out what each partner can and can’t do. Again, like when employing someone, you wouldn’t go into business with someone that you envision having problems with but having clear guidelines make situations easier to navigate for everyone. There are many subjects that can be covered in these agreements, some examples are:
Perimeters of how you value shares.
Permissions on spends. For example, one shareholder can’t spend £15,000 of the businesses money without it being signed off with the other shareholders.
What happens when sell business, also what happens when one of you wants out.
On top of the headache of trying to negotiate when in a tense situation, if you don’t have a shareholders agreement it may cause problems when selling to someone else, they may even ask for one to be drawn up. If you go through formation agent, you’ll get standard memorandum and articles but a shareholders agreement is a bespoke piece that you can go more into detail.

4. Business Documents – Terms and Conditions (T&C’s), Privacy Policy, Partner Agreements 

All of the above have been focused on internal affairs of the business but now it’s time to think about your customers.
Terms and conditions – are obviously really important, especially if you are a sole trader providing service. We don’t recommend writing a get out of jail free clause for everything but be honest about the limitations of the service or product your providing. Keep it in plain language and reasonable; this will help with customer disagreements. A rule book of what you are providing so you and the customer are on the same page.
Privacy/cookie policy – it’s important if you store any customer information you have a privacy policy on your website. Standard templates are easy to download and need to be displayed where users can easily find them. They also need to include a clear way to contact you.
Partner agreements – if you want to set up networks, referrals, kick-backs, commercial arrangements you will need partner agreements. These are pretty straightforward and not everyone will ask for one however we advise drawing up a short agreement for both parties to sign so everyone is on the same page.

5. Buying and Selling Businesses 

If you’re not setting up your own business but rather buying one, you will have to cover the above but what about the legal element of the buying / selling process? Best practice includes:
Offer Letter – this is the ‘heads of terms’, it should include the top line details of the transaction and shows your serious intent to buy the business.
Due Diligence – this is when you get into the business to find the skeletons! Share holder agreements, current employment contracts, T&C’s, the money structure of the business will all be gone through.
SPA (Sale and Purchase Agreement) – this is the most detailed, legally binding document that is agreeing to the transaction, once this is signed the sale in final.

Business Name Protection

Why Register Your Business Name? 

Registering a business name is an important step when setting up your business. Choosing the perfect name can be daunting, so we are here to help you through the process. Our service is ideal for sole traders, partnerships and limited companies looking to check and protect their trading name.
Benefits of registering your business name –
Ensure your business name is unique, does not copy an existing business or entity, and meets all statutory legal requirements.
Protect one of your most important assets, your business name, from the malpractice of passing-off, in which competitors copy or use your business name.
Make the most of social media by protecting your online reputation and handles.
A guarantee that we will initiate and cover your legal fees, up to £10,000, if action needs to be taken.
Receive information on any relevant updates in legislation.
Become part of our business community and connect with likeminded business owners.
Access to resources and advice that will enable you to save time and money.
Here at Start.Biz (formly known as the National Business Register) we are passionate about supporting businesses and helping you realise your dream of being your own boss.
Register Your Business Name Now

What are the Costs of Business Names Protection? 

Business Name Registration costs an annual membership fee of £99 (plus VAT) and includes initial name searches, a display certificate, protection against ‘Passing Off’, obtaining formal statutory permission if needed and expert advice from Start.Biz.
We understand that setting up your own business can seem over whelming at times, our expert team has nearly 40 years’ experience and are here to help you every step of the way. If you have any questions about our services, or just need a little advice at whatever stage of your business journey you are, please get in touch.

How we Protect Your Business Name 

We will protect your trading name against copying by another business, company or brand. This copying is called “passing off”; legal costs, court fees, solicitors and counsel fees are paid by us, for further information please refer to the T&C’s.

What is ‘Passing Off’? 

The law of passing off stands to protect a trader’s goodwill and business against copying, (Passing Off). In order for a passing off action to succeed, you will need to substantiate the following matters:
A misrepresentation made by another, with respect to the business name, in the course of that particular trade.
The misrepresentation is made to the principal customers or prospective customers.
The misrepresentation does cause damage to the principal business or goodwill of which the business name has developed.
Although these elements may be present in an incident that constitutes ‘Passing Off’ it is important that you make us aware as soon as possible so we can act quickly. This gives us the best chance of the claim being successful.

How to Make a ‘Passing Off’ Claim with Start.Biz (National Business Register) 

We appreciate each situation is unique and may require slightly different information depending on the nature of the claim. Our team will be here every step of the way to ensure you are fully informed and take the hassle out of the process so you can get on with the running of your business.
We will ask you to fill out a ‘Passing Off’ complaint form with as much information as possible, sent via email.
Now we get to work! If there is any missing information we require to proceed with your particular claim, a member of our team will be in touch to advise.
We will then issue a letter of notice to the alleged offending party stating that they are ‘Passing Off’ an established business name. This letter will also include useful information for them and next steps on how they should proceed going forward.
If, after this letter has been received, the other party are looking to contend the ‘Passing Off’ action, we will enter a dialogue with them and/or their solicitors. We will start to build a case demonstrating their infringement and work closely with them to resolve the issue at this stage.
Once the above options have been exhausted and it is evident that the ‘Passing Off’ action cannot be progressed without resorting to litigation, we will take your case to the external Legal Counsel.
Since 1984 we have successfully prevented thousands of organisations from copying a registered member’s business name. We can boast a highly professional qualified team who are specialists in their field. Our business exists to protect members’ trading names and for a small annual fee you have access to, and support from internal and external specialists who will endeavour to resolve your problem quickly and effectively.
For a free, no obligation Intellectual Property audit or to discuss your personal circumstances please call 0121 678 9000 or email info@start.biz

Guarantee Company FAQs

WHAT IS THE DIFFERENCE BETWEEN A GUARANTEE AND A LIMITED COMPANY? 

A Guarantee company does not have shareholders who receive the benefit of the profits. ‘The Guarantors’ just guarantee that they will pay a certain amount to creditors should the company fail.

HOW MUCH IS THE GUARANTEE FOR EACH MEMBER? 

That is up to you, the higher the amount, the higher the guarantee. Most members only give £1 guarantee meaning they are only liable for that amount.

WHAT ARE GUARANTEE COMPANIES USED FOR? 

They are not seen as commercial trading companies and can be charities, members clubs, Associations, or as communal property owners i.e., a block of flats with each owner as a member.

IF NO SHARES ARE ISSUED HOW CAN ANY PROFITS BE TAKEN? 

Directors are still appointed, and they can properly take any expenses, salary, bonuses etc. that the company decides to give them.

CAN A GUARANTEE COMPANY BECOME A CHARITY? 

Yes, many Guarantee companies are formed as charities to raise money from the public to benefit the charity.

CAN A GUARANTEE COMPANY RAISE FUNDS? 

Yes, for example 50 people paying £1000 into a company could then elect to buy a premises for their “club” or “association” to be run from.

DO ANY MEMBERS HAVE DIFFERENT AMOUNTS OF GUARANTEE? 

They can, however we recommend all members guarantee the same amount.

DO ALL MEMBERS HAVE TO GIVE A GUARANTEE? 

No, say an association is formed with 4 original guarantors then it is up to them to decide whether new members become guarantor members or not. An association of 10,000 members may only have a few as actual guarantors.

HOW ARE DIRECTORS APPOINTED? 

By vote of the members, or in a new company the first members may decide to be the first Directors.

Limited Company FAQs

WHAT IS THE BENEFIT OF LIMITED LIABILITY? 

Limited Liability protects the owner of a Limited Company from personal loss as the company is a separate entity and hence has its own profits and debts. This is unlike the owner of a business (sole trader) as his business debts would in fact be his personal debts.

HOW DO I CHECK IF MY CHOSEN COMPANY NAME IS AVAILABLE? 

You can check the availability of a Limited Company name via our online search service. When choosing your name there are some factors to consider. It needs to be unique and must not be offensive, constitute a criminal offence or give the impression that the company is connected with the Government or a Local Authority. If you have any queries, please contact us and we will be able to offer expert advice.

WHAT INFORMATION DO I NEED TO SUPPLY FOR THE NBR TO FORM MY LIMITED COMPANY? 

1) the company name.
2) the people:
3) – names and addresses of the shareholders
– names and addresses of the directors
– dates of birth
– telephone numbers
4) – town of birth
– mother’s maiden name
5) a registered office address
6) – company objectives / activities
– the number / type of shares being issued

CAN I FORM A LIMITED COMPANY AND TRADE USING A DIFFERENT NAME? 

Yes, although it may be wise to protect your trading name using our Business Names Protection service before commencing business so as not to infringe on an existing trading name and to ensure protection of your name for the future.

CAN I FORM A LIMITED COMPANY AND LEAVE IT DORMANT UNTIL I WISH TO TRADE? 

Yes, once the company is formed and the company officers are in place, the company can remain dormant until you need it. However, on the anniversary of its incorporation you must file a confirmation statement and dormant accounts (“nil” if it has never traded) with Companies House. You must also remember to keep Companies House informed of any changes within the infrastructure of the company as they happen e.g., if there are changes in Directorship or Registered office address. This requirement is also the same for companies that are trading, and we can assist you with these ongoing matters.

WHAT OFFICIAL DETAILS AND PERSONNEL DO I NEED IN ORDER TO FORM A LIMITED COMPANY? 

To form your company, you will need at least one director and at least one shareholder (these can be the same person). A UK registered office address is also required. This can be your address, or we can provide you with a registered address service.

WHAT ARE THE COSTS INVOLVED? 

To set up a new company costs £135 inc. VAT and a full company kit.

WHAT IS INCLUDED IN A FULL COMPANY KIT? 

The cost includes all formation fees and expenses and the unique National Business Register full company kit. This comprises of a smart attaché case containing 6 copies of the memorandum and articles of association, the certificate of incorporation, we complete the company register, PSC (Person with Significant Control) information, director forms and share certificates, plus any extras as required.

HOW LONG WILL IT TAKE? 

To form a new company takes around 24 hours. Our expert team are on hand to advise what is best for you and guide you through the process so if you have any questions get in touch.

LLP FAQs

IS AN LLP A BUSINESS OR A COMPANY? 

The general answer is both, technically it’s a company, but has tax advantages of a business and limited liability.

WHO CAN BECOME AN LLP? 

Any profit seeking commercial business and professional firms. This type of formation is most commonly used by professionals looking to go into business together; for example, law and accountancy firms.

WHAT IF THE BUSINESS RUNS UP DEBTS? 

Registering as an LLP means you are protected against debts the business incurs and any debts a ‘partner’ may also incur.

DOES THE LLP HAVE TO FILE ACCOUNTS LIKE A LIMITED COMPANY? 

As technically it is a company it must file company accounts although these are usually filed in a brief, modified form for small companies.

WHEN WOULD I HAVE TO FILE ACCOUNTS? 

Your accounting period would be 12 months from the end of the month in which your company is formed, you must submit those accounts within 10 months after the end of your financial year. (The actual accounting period can be changed in the first year using form LL AA01).

HOW MANY PEOPLE ARE NEEDED TO FORM AN LLP? 

A minimum of 2 people.

HOW IS AN LLP TAXED? 

The same as a normal partnership.

CAN I TRANSFER FROM A PARTNERSHIP TO AN LLP? 

Yes, it’s straightforward and we can assist you, but basically the act is designed to enable you to become LLP without tax implications.

IS STAMP DUTY CHARGED ON TRANSFERRING ASSETS? 

Stamp duty is not charged if the assets are transferred into a new LLP.

I RUN MY BUSINESS FROM HOME CAN I STILL HAVE AN LLP? 

Yes, there is no legal restriction at all.

PLC FAQs

WHAT ARE THE BENEFITS OF A PLC? 

The shareholders of a PLC have limited liability. Capital can be raised through issuing shares and the business can be floated on the stock exchange or other alternative investment market (note this is not a necessity of forming a PLC). PLC’s can also offer you spread risk, more finance options and increased status. These can all help enabling future expansion and increased powers when negotiating with suppliers.

WHAT ARE PLCs USED FOR? 

Mainly for high-profile and larger companies trading internationally.

HOW IS A PLC DIFFERENT TO A LIMITED COMPANY? 

A PLC must issue a minimum of 50,000 x £1 shares, and a quarter must be paid up. A limited company only need issue 1 x £1 share.

WHAT IS THE LIABILITY OF A PLC? 

With a limited company as above the liability would only be from £1 payable to creditors. With a PLC the liability would be £50,000 minimum.

CAN I PUT GOODS, EQUIPMENT OR VEHICLES INTO THE COMPANY INSTEAD OF MONEY? 

Yes, you can introduce capital equipment up to the value, which then becomes a company asset and you would have no further liability if it has true valuation.

IS A PLC MORE RISKY THAN LTD? 

Yes, if not run properly. If you are just starting out or have a small to medium sized business, we would not recommend forming a PLC.

COULD I HAVE A LTD COMPANY AND A PLC? 

Yes, some clients use the PLC for the trading image and the Ltd for the risk element and contractual obligations. Both companies must be run totally separately.

IS CREDIT EASIER TO OBTAIN? 

Yes, because anyone dealing with the company knows you have assets of at least £50,000.

DOES MY PLC HAVE TO BE FLOATED? 

No, not at all, most PLCs are privately run and controlled. It is up to the Directors to float the company and issue more shares.

CAN I OFFER SHARES TO THE PUBLIC TO GET INVESTORS IN? 

Yes, this would be an option available to you. Our expert team are on hand to advise what is best for you and guide you through the process so if you have any questions please get in touch.

CIC FAQs

CAN A CIC BUY AND SELL GOODS OR SERVICES? 

Yes. A CIC can run much like a normal business provided it acts responsibly and its actions are subject to scrutiny by the CIC Regulator.

CAN A CHARITY BUY AND SELL GOODS OR SERVICES? 

A charity is not allowed to “permanently trade.” This means it can run a temporary fund-raising event but not run price list of items permanently on sale. Many charities get round this problem by setting up a separate company (CIC or Guarantee) that dedicates its earnings to the charity.

CAN WE PAY OUR EXECUTIVES AND DIRECTORS? 

For charities and companies limited by guarantee it is not permissible to pay salaries to trustees. This rule can be circumvented in certain exceptional cases. For instance, where a trustee serves as part of his or her official position (e.g., a church or religious leader, a mayor or council leader). In some cases, this means that the person who founded the organisation and its main driving force cannot be on the board of Trustees.
For CICs there is no such restriction provided the salaries can be shown to be reasonable (this is subject to scrutiny by the CIC Regulator).

HOW LONG DOES IT TAKE TO REGISTER A CIC COMPANY? 

There is a difference in processing time between the distinct types. The slowest is the Community Interest Company (CIC) because it must pass through the normal Companies House procedures AND be checked by the CIC Regulator’s office. Furthermore, CICs (Community Interest Company) cannot be formed electronically. We must submit documents by post. The process is usually completed within 4 weeks.
On the other hand, companies limited by guarantee (whether or not they are to be charities) can be registered electronically. Because they need special documents they are not as fast as regular limited companies, but they are normally processed in one or two days.

IS IT FASTER, OR BETTER, TO FORM A REGULAR LTD FIRST AND THEN CONVERT IT TO A CIC? 

No, it is not. CIC conversion takes about as long as forming a new CIC and, of course, it increases the cost. There is also a risk that you will end up with the wrong structure because most LTD formations default to the “limited by shares” format, which may not be the right format for your CIC. Take the time to think through the options and discuss it with one of our advisors if you need help. You can convert a “limited” into a CIC; but, if you know from the outset that it is a CIC you require, it is best to order a CIC from the start.

WHAT ARE THE PROTECTIONS FOR THE DIRECTORS AND MEMBERS/SHAREHOLDERS? 

As with normal companies the CIC benefits from “limited liability”. This means that the CIC will be liable for the actions of its directors and directors will not incur personal liability, except in certain exceptional circumstances (such as where the director has acted fraudulently or continued to trade when the CIC has become insolvent). Shareholders will only be liable up to the amount of their contribution (where a CLS), and members only up to a nominal amount (usually £1) in the event it winds up (where the CIC is limited by guarantee).

WHO REGULATES CICS? ARE THE REPORTING REQUIREMENTS THE SAME AS FOR NORMAL COMPANIES? 

CICs are regulated by the CIC regulator with what is intended as a “light-touch”. This compares with the relatively “heavy” regulation of charities by the Charity Commission. However, the CIC regulator will respond to complaints from stakeholders and has considerable powers to act to protect the community interest.
As with all companies, CICs are required to file annual accounts and an annual return with Companies House. In addition, a CIC must file a community interest report annually, which will explain how the CIC pursued the community interest and involved its stakeholders and will, if applicable, give details of payments to directors and any dividends paid.

WHAT DO I NEED TO DO TO SET UP A CIC? 

Firstly, you will need to make an application. The application will set out the CIC’s social purpose and the activities it will carry out to achieve it. Provided there are no issues raised by the CIC regulator or Companies House, the CIC should be registered around two to three weeks from the application date.