The UK ranks 7th in the world for ease of doing business and 14th for starting a business, according to a recent survey by the World Bank. When it comes to registering a limited company, the UK must be one of the easiest.
So what’s stopping you? Many of us have a natural reticence when it comes to the legal or accounting aspects of business. But with online registration via the GOV.UK it’s a straightforward process. And at a cost of £12 payable by card or PayPal, it won’t break the bank.
Running your business as a limited company presents many advantages. Customers and organisations are often more comfortable dealing with a limited company. And because a company is a separate legal entity, it provides a clear line between your liability and the company’s when doing business.
Drawbacks? There are a few requirements, including filing accounts and corporation tax returns each year. For most small companies these are not onerous. If you have a reasonable accounting knowledge you can file accounts online yourself. Otherwise, the services of an accountant specialising in small business are generally inexpensive.
As with most aspects of running a business, good organisation and record-keeping is important. This applies whether you run your business within a limited company or as a sole trader. If you don’t keep a record and payments and receipts as you go along, you are will suffer the pain later on. There are many online accounting packages that can help you, such as Quickbooks and Xero. These also allow you to link in with an accountant who can access your books to file your accounts and tax return.
If you decide to go ahead, one of the first tasks is to decide on a company name. It’s simpler if your company name is the same as your business name. You will need to check on the Companies House database that someone hasn’t already registed the same or a similar company name. https://beta.companieshouse.gov.uk/
Once you’re happy with the name, go onto the GOV.UK company registration website. https://www.gov.uk/limited-company-formation/register-your-company
The website will lead you through a few standard questions to assess whether you can proceed to set up a new company online. Most of us will be eligible as long the company structure and ownership is standard.
Here’s a list of things you need to think about when completing the company registration:
Company name. Usually this will be your business name, followed by Limited or Ltd.
Address. You need to provide a physical address in the UK for your company. Note that this will be available to the public, so think about whether you want this to be your home address. Other options include using a PO Box or a registered address provider.
Directors. You need at least one. You can appoint more directors later. Each director requires a contact (correspondence) address. Again, consider if you want your home address visible to the public.
Share capital and shareholders. £100 of £1 shares is a common choice, as this allows you to divide the shares across several shareholders. A share capital of £2 for example, would not allow much flexibility. Note that you do not need to pay the share capital into the company unless it is wound up.
Online registration. It’s usually best to register everything online, unless your company has unusual requirements. You can also register for Corporation Tax, PAYE and VAT.
WebFiling. Companies House WebFiling allows you to submit your company details online. It also allow you to register for the PROOF scheme, which protects your company from fraudulent filings. You will need your company details to complete the WebFiling registration.
Step-by-step guidance and links are available on the GOV.UK website. https://www.gov.uk/limited-company-formation/register-your-company