When it comes to company formation in the UK there are a few things that you need to know. In this article we will outline the basics of company formation and what you must do to get your business off the ground. So, whether you are thinking of starting a new business or just want to learn more about company formation, keep reading!
What is Company Formation?
The formation of a company generally refers to the process of incorporation, which is the legal process used to create a new company. Incorporation creates a new legal entity that has certain rights and responsibilities that are distinct from those of its owners.
To form a company you typically need to register it with the relevant government agencies. The Agency responsible for registering companies in the UK is Companies House. Once your company is formed you can obtain a business bank account, hire employees and start operating your business.
Types of business
When forming your company there are a few different types of business entity from which to choose. The most common types of companies in the UK are sole traders, limited companies (LTDs), partnerships and limited liability partnerships (LLPs). Each type of entity has its own advantages and disadvantages, so it is important to choose the right one for your business.
The most common type of company in the United Kingdom is a private limited company with shares. This means that the company’s shareholders have limited liability, which means that they are responsible for the debts of the company only up to the amount that they have invested. A private limited company must have at least one shareholder but there is no maximum number.
If you are still not sure which type of company is right for you then please visit our page on choosing a business structure. There you can learn more about each type of company and decide which one is the best fit for your business.
Why should I incorporate a company?
There are several reasons why you might want to incorporate a company. One of the most common reasons is to protect your personal assets from liability for the debts and obligations of the company. If your company is sued, for example, then only the assets of the company would be at risk and not your personal assets such as your home or savings.
Another reason to incorporate a company is to raise capital by selling shares in the company. By selling shares you can attract investment from individuals or institutions who believe that the company will be successful and that their investment will grow over time.
Finally, incorporation can also make it easier to transfer ownership of the company if you ever decide to sell it. Because the company is a separate legal entity it can be bought and sold without affecting your personal assets.
Incorporating your business may also help you do business with other businesses by making it easier for them to work with a firm that has all of the necessary papers in place. This can improve the professionalism of your organisation and help you gain credibility among clients and suppliers.
Company formation procedures
There are a number of ways to form a company in the UK. The most obvious way is to register it with Companies House. If you want to register your company yourself then you will need to fill out some forms and pay the required fees. It will cost you £12 to do this online and £40 if you register by post.
If you want to form a company more quickly, however, and with the assurance that it is all carried out correctly, then you can use a company formation agent, such as Uniwide Formations. Company formation agents are businesses that specialise in incorporating companies. They usually charge a fee for their service but they can often complete the incorporation process within a matter of hours. They can also offer advice and support throughout the process.
What are the 4 steps to forming a company?
The formation of a company typically includes the following steps:
1. Choose a name for the company.
2. Consider the company structure and select your formation package.
3. Make a purchase by selecting additional items and services, such as a corporate bank account, and completing the payment process.
4. Fill out the company formation application. This includes your company’s registered address and information about its director and shareholders.
Let us look at each of these phases in further detail.
Naming your company
One of the first things that you must do when forming a company is choose a name. This name will be used on all of your company’s official documents and correspondence, so it is important to choose a name that is both professional and reflective of your business.
There are some things to keep in mind when choosing a name for your company. First, the name must be available for use: You cannot choose a name that is already in use by another company.
Another thing to keep in mind is that your company name cannot be too similar to the name of a company that already exists. If your chosen name is too similar then it may be considered “confusingly similar” and you will not be allowed to use it.
Finally, there are some words and expressions that you cannot use in your company name without approval from the relevant government authority. Examples of these include – but are not confined to – “Royal”, “National”, “British” and “University”.
Since there are a number of things to consider when selecting a company name, here are some of our top recommendations:
- Keep it short, simple, and easy to remember.
- Avoid names that are too similar to those of existing company names or trademarks.
- Choose a name that reflects the type of business that you will be doing.
- Avoid using sensitive words or phrases in your company name.
You are most welcome to use our name search tool to see whether a particular limited company name is available. This connects to a government database of registered company names in order for you to determine whether the chosen company name is available at Companies House.
Choosing a company formation package
The next step in company formation is to choose a company formation package. There are a variety of formation packages available and the one that you choose will depend on your specific needs and requirements.
Some formation packages include additional services, such as a registered office address and printed company documents. Others simply provide the basic formation documents and leave it up to you to arrange for additional services.
Choose the company formation package that is best for you by visiting our “Compare Company Formation Packages” page. On this page you can compare the features of each package. Once you have chosen a package click on the “Buy Now” button to proceed with the purchase.
Purchasing additional items and services
Once you have selected a formation package you will need to purchase and/or just select any additional items or services that you require. This might include a corporate bank account, VAT registration services, an introduction to an accountant or something else.
Simply click on the “Add to Cart” button next to the item or service you that would like to purchase and follow the on-screen instructions.
Filling out a company formation application
The final step in forming your company is to fill out the online application to register your company. This form will include your company’s registered address and information about its director/s and shareholder/s.
You can find a complete list of the documents and information needed for company formation on our website under: “Information Required for Company Setup“.
In the United Kingdom, all limited companies must have a Memorandum and Articles of Association. These papers formalise your company’s operations. You can use our standard Memorandum and Articles of Association or draft and upload your own document if you prefer.
When starting a UK business, remember that most of the information that you provide will be available to the public. Once you have completed the form, we will submit it to Companies House for approval.
Certificate of Incorporation
After your company has been approved, you will receive your Certificate of Incorporation, which is proof that your company has been formed and is now a legal entity. You should keep this document in a safe place because it will be required for various purposes, such as registering for VAT.
Your company registration number will be included on your Certificate of Incorporation. This is a unique number that identifies your company and is used for various purposes, such as filing annual returns and paying taxes.
There are a few other things to keep in mind after incorporation. You can find more information on our website: “What happens after you set up a company?“
What to do after company formation
Once your company has been registered with Companies House, you will need to obtain a business bank account. This is a separate account from your personal bank account and is used for business transactions.
It is important to keep accurate and up-to-date records of your company’s financial transactions. This will help you to prepare your annual accounts and tax returns, as well as to apply for loans or investments in the future. We recommend using accounting software to help you with this.
Once you have taken care of the administrative side of things, you should think about marketing and promotion. After all, you want people to know about your new company! There are a number of ways to promote your business, including online marketing, traditional advertising and PR.
Company reporting and filing requirements
There are a number of annual filing requirements to which you must adhere once your company is formed. These include the following:
1. Financial Accounts – These must be filed every year with Companies House and they show how the company has performed financially over the year.
Dormant companies are companies that are not trading and have no income or assets. If your company is dormant then you do not need to submit a profit and loss account or directors’ report to Companies House, nor to file accounts with HMRC. You must still, however, submit dormant company accounts to Companies House.
2. Company Tax Return – All actively trading companies must file a corporation tax return with HMRC on an annual basis (dormant companies are exempt).
3. Confirmation Statement – This is a relatively new requirement that came into effect in June 2016 and it replaces the Annual Return. It is a statement that confirms certain information about the company, such as SIC codes, any changes in director/s or shareholder/s and a statement of capital.
If you fail to comply with these annual requirements then you may face significant penalties. To learn more about the annual filing requirements for companies in the UK you are welcome to go to and read our article: “What are the Annual Filing Requirements for a Company?”
These are just some of the basics that you need to know about company formation in the United Kingdom. If you would like to set up your limited company, then you are most welcome to speak with our specialists.