If you are looking to start a business in the United Kingdom, you will need to know about company formation – and the frequently asked questions that come with it. This page will provide answers to some of those questions, but if you have any others, please do not hesitate to contact us. We are here to help!
Forms of business
When deciding whether to operate as a sole trader or limited company, there are a few key things to consider, such as tax, liability and control.
Sole traders are self-employed individuals who run their businesses in their own name. This means that they are personally liable for any debts or losses incurred by the business. However, sole traders also have more control over their businesses than limited company directors. They can make all the decisions about how the business is run, without having to consult with anyone else.
Limited companies are legal entities in their own right, separate from the people who own and run them. This means that the directors of a limited company are not personally liable for the debts of the business. However, limited companies do have to adhere to certain rules and regulations, and the directors may not have as much control over the business as a sole trader.
Read more about it in our article: “Self-employed or limited company?“
Most people require a standard limited company since this is suitable for nearly all types of trading. We will be happy to tell you more about the advantages and disadvantages of a private limited company.
A limited company is a form of business legally separate from its shareholders and directors. Even if a limited company has just one person as its shareholder and director it remains a legal entity separate and distinct from that person. The company can enter into contracts, and can also be sued, in its own right.
The owners of the company are protected by “limited liability”, hence it is a “limited” company. Apart from a case of fraud or other serious wrongdoing, the owners are liable for the debts of the business only up to the value of their original investment in it.
Your company registration
Companies House normally register companies between 9.00am and 5.30pm from Monday to Friday and your company will usually be formed within 3 to 6 working hours. This timescale may be subject to change, however, depending upon the workload at Companies House.
If it is vital that your company be incorporated on the same day or as quickly as possible, however, then we recommend adding the additional Same Day Service to your order on the checkout page (subject to its availability from Companies House). Please note that Same-Day Applications must be submitted before 2.30pm Monday – Friday.
Yes. One person can register and form a Limited Company online and it can be owned, managed and run by one person. This person would therefore be the sole director, shareholder and person with significant control (PSC) of the company.
You must provide a company name and personal information about directors, shareholders and PSCs (persons with significant control) such as address, date of birth and nationality. You must also give us your company address.
For further information please read our article “Seven Things to Decide Before You Set Up a Limited Company” and visit the Required Information page.
As a company formation agent, we must follow “Know Your Customer” (KYC) requirements and obtain our customers’ proof of identity and address.
If you are a UK resident then we will perform a digital check of your ID and address using the information that you have provided in your company order form. In 90% of cases our customers successfully pass our digital ID checks.
If you are not eligible for our digital ID check or do not pass our digital ID check, we will send you by email a special request that you provide the necessary information and documents. For more information, see our ID requirements.
Not on paper: It is all done online to make things simple. No printing or scanning is required. This means that you can do it from anywhere in the world, as long as you have an internet connection.
The electronic registration process in the UK is simple and efficient. Once that is done, you will receive a confirmation e-mail and your company will be officially registered.
As soon as your company is registered at Companies House a full set of digital company documents will be sent to you via e-mail in PDF format.
A printed set of company documents may also be included with your incorporation order; simply choose this option when filling out the form to set up your firm. We will send you the documents by Royal Mail or DHL.
You may need to sign some documents when you open a bank account, but the company formation itself is all done online.
Yes, you can add your own articles of association when forming a limited company. We charge an administration fee for this service.
Adding your own articles of association is a way of customising the rules that govern your limited company. This can be useful if you want to add specific provisions that are not covered by the default rules set out in the Companies Act 2006.
If you are thinking of adding your own articles of association, we recommend that you seek professional legal advice to ensure that the provisions you include are valid and compliant with the Companies Act 2006.
Yes, you can do this under certain conditions. As a company formation agent we must follow “Know Your Customer” (KYC) requirements and identify our customers and obtain proof of their identities and addresses.
If you register a company for someone else, identification should be provided by an account holder (the person who is actually registering the company) and by the company’s directors and PSCs (persons with significant control).
Firstly, you must fill in your application to form a company through our Website. We will then try to perform a digital check of your ID and address using the information that you have with which you have filled in the form online.
If you are not eligible for our digital ID check, or do not pass our digital ID check, then we will e-mail you a special request that you provide the necessary information and documents. For more information, see our ID requirements.
Special rules apply to “regulated” customers, i.e. solicitors, accountants, etc, who can easily register companies for third parties, i.e. their own customers, using our platform.
If you are a person or organisation which is supervised by a relevant authority, or is a member of a relevant professional body, then you or your organisation will be subject to the UK AML requirements and we will rely on you to undertake the necessary checks.
Just choose one of our company formation packages and proceed to set up your new company.
There is no limit to the number of private limited companies that you can own. You can be a director or shareholder in as many companies as you like. However, you may need to disclose your ownership stake in other companies when applying for financing or tenders. And, if you’re a company director, you’ll need to make sure you comply with your fiduciary duties to each company.
So, while there’s no legal limit to the number of private companies you can own, it’s important to consider the practical implications before starting or investing in multiple businesses.
Your company name
The name of your company cannot be the same as, or too similar to, that of another registered company. Whatever name you choose, however, Companies House requires that a limited company has at the end of its name either “Limited” or, in its abbreviated form, “Ltd” (there is no difference between the two apart from how they appear on paper).
You can use our name search tool to check whether a company name is available. This links with a government database of registered company names to find whether the limited company name that you would like to use is available at Companies House.
No. You must register a new limited company using your desired company name in order to reserve that name and prevent others from using it.
Once your company is incorporated, you may maintain it in a dormant (i.e. non-trading) state but you must still fulfill your statutory filing and reporting obligations.
Some words are never allowed in a company name. For example, any words whose use either causes offence or which is an offence in and of itself. A company name must not mislead as to the nature of its business activities in any way that is likely to cause harm.
Sensitive words and expressions. There are some words and phrases that are not always forbidden within the name of a company but permission for their use should first be sought from the appropriate body. As a rule, these words and phrases are connected with HM government or with public authority, for example the words “Queen”, “King”, “Royal”, “Police”, “Law Commission” etc.
Some words and phrases are protected by other legislation. For example, you may not use the word “charity” without the permission of the Charity Commission. Companies House regulates the use of all sensitive words and your company will not be registered if the requirements are not met.
There are certain circumstances in which limited companies may omit the word “Limited” or “Ltd”. This applies only to a private company which is limited by guarantee. A private company that is limited by guarantee can apply for exemption from the requirement to include “Limited”, “Ltd”, or the Welsh equivalents “Cyfyngedig” or “Cyf”, from its name provided that the articles of association meet certian requirements.
You can apply for exemption from using the term “limited” at the end of your company’s name while you are filling in your application to register it on this website. Either use your own Articles or edit our model Articles to include the objects of your company that meet the requirements for such exemption. To claim an exemption after registration/incorporation, a company that is limited by guarantee must complete Companies House form NE01.
Your company details
Company directors are the people responsible for the day-to-day running of a company. Anyone who is above the age of 16 may be a company director. If the company breaks the law then you, as a director, may be held accountable.
The powers and responsibilities of a director are defined in the company’s Articles of Association. Usually, the same person can be both a shareholder and a director of a company.
Shareholders are the owners of a company. They own shares in the company which entitle them to receive a percentage of the company’s profits. Most shareholders also have a say in important company issues, such as the appointment of new directors.
A company shareholder can be a person, a group of people, a partnership, another company or any other kind of legal entity or corporate body.
A person with significant control (PSC) is someone who has significant ownership and/or control of a company. They are sometimes called “beneficial owners”. A PSC is anyone who:
- owns more than 25% of the company’s shares.
- holds more than 25% of the company’s voting rights.
- holds the right to appoint or remove the majority of directors.
- holds the right to exercise, or actually exercises, significant influence or control.
- holds the right to exercise, or actually exercises, significant control over a trust or company that meets at least one of the first four conditions above.
Companies must identify their PSCs and tell Companies House who they are. If you ultimately control more than 25% of the company or you are a shareholder with more than 25% of the company’s shares then you are a Person with Significant Control (PSC).
Learn more in our article: “Register of People with Significant Control (PSCs) – an Ultimate Guide“.
Although most companies have only one type of share, different classes of shares can be created. Each class may be comprised of different voting, dividend, and/or capital rights.
Although each class could be given a descriptive name, it is common just to label multiple share classes as “A” shares and “B” shares (and maybe even “C”, “D” shares, etc). Examples of different share classes include: Ordinary shares, non-voting shares, redeemable shares, preference shares, management shares, etc.
We fully support online company formations with more than one share class. As part of the formation process you will need to name each class of shares and document the particulars prescribed for each.
It is essential that appropriate legal and taxation advice be taken by the company and its shareholders when setting up and documenting a complex share class structure.
Your Company Registration Number (CRN) is unique, consists of 8 characters and is shown on your company’s Certificate of Incorporation. Companies House will have automatically assigned this number to your company when it was formed.
Your CRN can be found also on any official documentation that you receive from Companies House and by searching for your company by name on the Companies House online public register. You are welcome also to get in touch with us if you have trouble finding your CRN.
You must display your Company Registration Number on all company stationery, websites and other online material.
You will be e-mailed the authentication code for your new company once it is registered at Companies House. You will receive your company’s documents the same way.
You can then see your company’s authentication code also online, through your customer account on our website.
Your company’s Unique Tax Reference (company UTR number) is used to identify it for tax-related purposes. You will have been sent a letter confirming this specific ten-digit reference number and guidance on your tax responsibilities to your registered company address.
Once your company is registered at Companies House, HMRC will be notified of its existence automatically. Within 14 days of registering your company you will receive a letter from HMRC that will give you your company’s unique taxpayer reference.
You should also find this reference number on other statutory communication you receive from HMRC. Your company Unique Tax Reference should not be confused with the personal Unique Tax Reference number that people receive when they register for self-assessment.
If your company turnover exceeds the VAT registration threshold of £85,000 then you must register for VAT with HMRC (Her Majesty’s Revenue and Customs). You may make an optional application for VAT registration before and/or without reaching that level, however, so that you can claim back the VAT that you have paid on your purchases.
You can find more information about VAT registration details on https://www.gov.uk/vat-registration. We recommend appointing a “tax agent” to deal with HMRC on your behalf regarding VAT matters. It is normal to appoint a qualified accountant for this purpose.