It’s essential to understand the steps you need to take to register a company when deciding to take your idea from paper to person. HMRC is particular about the paperwork and all the correct information being handed in, so you need to provide the accurate information to avoid being blocked.
Structure, directors and shareholders
The first thing you need to determine when you want to register a company with the Company’s House is the type of company and who the active members are. Most people register their businesses as a “private company limited by shares” as a means of protecting themselves financially. This kind of registration prohibits personal assets from falling under review if your company runs into financial trouble.
Your next step will be to appoint positions to various people involved in the company’s daily running. Each person’s details need to be included in total and their work value and stake in the company.
Registering your Company’s name
You need to check that the name you would like to use is available and not affiliated with any other company names. It shouldn’t sound similar or be in the same sector. Consider the following when picking a name for your business:
- Choose something catching and easy to pronounce. You want your customers or clients to remember your company’s name so they can find you and refer you to others.
- Stick to a name that’s easy to spell so that you’re easy to find online. Most businesses grow their online presence through searchable tags and phrases, and a problematic name could exclude you from the search.
- Look at businesses with similar backgrounds and product lines to get inspiration for catchy and easy-to-remember names. However, keep your selection unique.
A UK Company formation is the registration of a business as a limited company, inclusive of:
- Company name
- Company address and contact details
- Name of each member and their position in the company
- Tax registration information
Incorporating the business as a limited company makes it an official legal entity. As a legal entity, the company is separated from the directors and shareholders, barring them from financial responsibility when the company goes into liquidation or financial distress. A legal entity on its own stands a better chance at investment finance through banks or retail investors because the company is seen as a singular asset, with its financial history and information legally available through the HMRC.
Understanding Limited Company benefits
Having a limited company has many positive attributes that benefit all the directors and shareholders. The most important thing is that none of the parties affiliated with the company will be held liable for any of the company’s failure, meaning that they will avoid asset forfeiture if the business fails: an excellent benefit for registering as a limited company. Having a professional accountant assist with all the company’s invoices, administration and taxes helps other large corporations feel safe to do business with the company. It makes taxable invoices look more legitimate when issued from a registered company with an accountant that’s qualified for all accounting methods. Limited Companies have a separate money trail. They can build a borrowing history, a financial portfolio that doesn’t affect their members. They can work on their credit score to take on new suppliers and create business platforms with other companies.
Limited Company’s pay corporation tax that doesn’t directly affect the members. Each director and shareholder can take their salaries in dividends, lowering the amount of tax that they pay to the HMRC. The maximum wage would be £12,500, which is entirely tax-free, with the rest being paid out in dividends for which no National Insurance Contributions are paid.
If a director or shareholder dies or retires, their shares can be sold or distributed amongst the remaining shareholders. There are no rules against the dividends being sold to outsiders either if everyone on the board agrees to it.
To conclude, having a limited company has both positive and negative attributes of which the positive play a more significant role. The aim behind registering a limited company is to exercise ideas and have the freedom to do so without the risk of losing personal assets. The company’s registration is vital. All documentation needs to be thoroughly checked and filed for the company to be allowed to run. Once you’ve received your certificates from HMRC and you’re about to trade, be sure to keep an accountant around so that all your tax information is correct and filed on time.