UK Companies Registration and Formation
4 June, 2021
You may have at some point wondered what is involved in the process of UK companies registration and formation. First, I was concerned about the rigorous and lengthy timing which might be involved. This was before I got to know that UK company formation has been simplified. The whole process can simply be done online, in the comfort of your homes.
The whole idea behind UK company registration is simply to transform your business into a legal entity. This can be achieved by registering your business as a limited company.
I remember asking a mentor why I must have my business registered. I mean, can’t I just start up a business and handle the risk myself? I certainly hope I am not the only one who has thought this way.
The summary is that was the day I finally discovered why everyone including you must have your business registered. Imagine having the law treat your business as if it was an actual person and therefore protecting its right even when your business is unsuccessful?
Why to incorporate a company in UK?
What UK company registration does is create an actual legal standing for your business.
Now, your finances, liabilities, agreements, and properties or asserts are all covered by the law.
In recent times, this process is completed through applications that are delivered electronically and approved within a short time frame. You do not even need to have everyone you wish to work with on the ground last the formation of the company. All you need at this point is just an individual who can register and run the business.
I know you are already excited and can’t wait to have your business right identified and protected like a person.
However, let’s take it slowly. When I recently met a friend who felt distraught because he felt all odds were against his business registration.
The problem was that he already set a target to achieve this goal.
Just like you must have done.
You know those thoughts we write down and tell ourselves.
Which include statements like “before the week is over, I should have my five businesses registered and running.”
However, what he didn’t know was that there are certain things that you need to put in place before these can be achieved. And this is why this article is for you. To guide you through what you ought to know before registering your business. Now, you don’t have to look as worried as my friend looked.
What You Should Know Before You Register Your Business
#1. What type of business do you want to start
This question is very important to know the kind of work needed to be involved. Are you sure you need a limited company? If you are in the affirmative, congratulations.
If you are not, you have nothing to worry about. You should be glad that you made up your mind before you started.
I once met a man who had started up a clothing business a while back. When our paths crossed again, he seemed to be talking about everything else but business. So I asked him about the business. I would have asked if I wasn’t aware of all he went through to have his business registered. Oh yes, his business was registered and running when we met.
He narrated to me how unprepared he was to be a major CEO.
He thought he was ready but after the next two years in the start-up business, he started facing reality. It wasn’t a problem for him to have a business. However, running a UK company register was huge for him. And maybe for you too.
If you have decided to run a limited company, you should understand the different types of a limited company. You should also be able to understand your options. Then, you should get the one that is right for your business.
Some of these UK companies include:
● Limited by shares,
● Limited liability partnership, and
● Limited by guarantee.
However, UK companies that are limited by shares are the most common type for companies looking to make a profit. UK companies limited by guarantee are mainly for non-profitable and charity organizations. UK companies limited by liability partnerships usually retain the flexibility of the traditional partnership structure. However, a Limited Liability Partnership also offers limited financial liability.
It may seem obvious for you to make a choice. However, it is advised that you consider the options to decide which business form is most preferred.
#2. Decide your company name:
Every company deserves to have a great and distinguished name for its business. As simple as having a name sounds since almost everything has a name. You may discover that a lot of people have a really hard time choosing a good company name. A company name should contain a sensitive or catchword.
I did have a hard time finding a peculiar name for my business initially before i started. Not that the names didn’t come up, actually a lot of them did but I couldn’t decide if these names were good enough. This got to me and one day, my friends came together and decided on a name for me. What they chose was not too different from what I had in mind. I guess it was the pressure on me that led to the indecision.
You could go-ahead to meet your family and friends if you are having a name block. You should have in mind that the name would be tied to your business and therefore, it must be unique. It must not be a name that has been used several times by different people or anyone at all else your name would be rejected. So, it is necessary to check if the name chosen is available before you register your company in the UK.
You should also ensure that your company name is not offensive or sensitive. Therefore, avoid making use of phrases or words that show a connection with the UK government, administration, or public authority.
As much as you can, keep your business name short and simple. It should not be a name that is hard to spell. This is to ensure that your company name is easily remembered by your audience. Your company name should also be able to tell people what services you offer.
You could also check in on any company house for suggested and available company names.
#3. Gather the documents needed for Registration
Remember the story of a friend who got distraught? It was actually because he did not put some of these documents together. It, therefore, became stressful when he had to get them and according to his time limit. They include:
● A registered office address
● Details of your company directors
● Details of your company shareholders
A UK company registered address must be an official address that appears on the record, can receive the company’s mail, and reach the directors. If you run your business from home, you can use your home address. However, if you are not comfortable with it then you could contact a registered agent service.
The details of the company directors include their name, date of birth, and residential address. The director’s address is exclusively for accessing the company’s director. This address is shown on the companies public record. It is used in cases whereby individuals or company house mails would want to get to the director himself and not the company.
The details of the company’s shareholders also include the name, address, and birthday. Every company must have at least one shareholder. Such a person may also be the director of the company. You can ask for the person’s National insurance number, phone number, passport number, etc.
Other details include:
● The goals and objectives of the company
● Share capital creation etc
#4. Confirm your UK company registration with companies house
To confirm it, all you need to do is to send it to the companies house where it would be approved. I recall how excited i was after i completed all other initial processes at first. So happy that I asked myself if it was necessary to send it, after all, i had everything good and ready. Of course, it is very necessary.
The function of this company house include:
● Registration of companies
● Receiving information about the UK registered companies.
● Ensuring that the public can access all past and present UK registered business.
After you have sent it, you need to wait for approval. Therefore, until you have received this approval, you can’t operate your business as a limited company. Legally, any agreement you make before your business is approved is thanks and void. Once the company house undertakes some approves all the information you sent, you will be notified.
However, it is important to note that filing using paper forms takes a longer time than when you file online.
Ways To File For UK Company Registration
Your UK company registration and be done in two major ways.
1. Online registration
2. Registration offline.
Most company houses are found online. This reduces the amount of paperwork involved and increases efficiency.
As effective as this may sound, your work efficiency is a factor of price. Registering online is a simple, secure fact and has a huge amount of work done within 24 hours.
We would not deny the fact that some people prefer to have their registration done offline. Either because they are not tech-literate or maybe because they prefer to be assisted physically. Whichever the case may be, there are company houses that are available offline.
Offline registration, however, is expensive and time-consuming. It has a standard service of £40 and a time frame of 8-10 days. Speeding up this process may cost an additional £100. If you need it that same day, you would have to indicate after the additional payment.
Once your registration is completed, you will be able to start trading as a limited company.
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A company owner is entitled to limited liability. This means that he/she is liable only to the nominal value of shares issued in the company. Any other amount of personal money owned aside from those shares will be protected.
You should know that registering your company is not a legal requirement in the UK. However, if you choose not to register your business, there will be no legal separation between you and your business.
Therefore, your assets and finances could get involved whenever something goes wrong. This risk is one of the major reasons why business owners choose to register their businesses.