The UK government has been relaxing requirements and making it easier for businesses to do business in the country. However, registering a company is not as simple as filling out some paperwork and sending it back. You will need to answer some important questions before you can register your company within the UK markets. In this blog, we'll discuss all the factors that you should consider before you plan to get your business up and running.
Question 1: What type of corporate entity will your business be?
In the UK, businesses have different types of options when it comes to corporate entities. These include:
- Sole traders - Individual entrepreneurs who own and operate their businesses alone.
- Limited companies - Establishing a limited company separates its legal entity from you and its other owners. A limited company is incorporated by registering at Companies House and no public trading of Ltd shares is allowed.
- Public limited companies (PLCs) have more employees but also incur additional costs and responsibilities. The difference between a PLC and a limited is that shares in a PLC can be publicly traded.
- Partnership - If your business is a partnership, you will need to select one of the types of entities outlined above as your business structure.
Once you have determined the type of entity that best suits your needs, it's important to familiarise yourself with the relevant regulations.
Question 2: Do you have all the documents in place?
In order to register with Companies House, you'll be required to produce specific documents, which include:
- A completed application form
- The required signatures of directors and shareholders
- Certified copies of ID documents (if a director or shareholder is not resident in the UK)
- A non-refundable application fee
- Person with Significant Control (PSC) Information
- Memorandum of Association
- Articles of Association
- Details about the type of business, i.e., the company’s trading activity which is typically called SIC
- A registered business address (If you will be running your business online, you can opt for a virtual address)
Once you have all of the required documents, it's time to submit your application. You can do this online or by post. Once submitted, Companies House will start the process of verifying your information and confirming that all documents are in order. Depending on the complexity of your business, this could take some days or a few weeks from submission.
Question 3: Do you have to pay VAT?
If you are registered as a limited company, then you will not have to pay value-added tax (VAT) on the business activity that your limited company engages in. You must register with corporate tax three months before starting trading. If you have a work visa and have established your company in the UK, you can claim the self-employed personal allowance. The income you generate from your business is taxed if you have a work visa. With HM Revenue and Customs, you can register online or over the phone. You may also have to pay income tax in your home country.
Question 4: How much money is required to register a company in the UK?
Setting up a company in the UK does not cost you a lot. Here are some of the fees associated with company registration in the UK.
- If you file your company directly with Companies House, you will have to pay a £12 filing fee.
- In addition, you may have to pay extra when starting a limited company to print formal company documents such as shares certificates and your Certificate of Incorporation.
- A ltd company can be registered by post for £40 if you choose to do it that way.
Other typical costs include:
Company House's annual fee is £13 if you file online or £40 via postal mail (most company owners file online). Additional costs may include hiring costs, accountants' fees, insurance, wages, taxes, etc., depending on your company's needs.
Question 5: Do I have a business account to run a business in the UK?
If you are running a company in the UK, it is recommended to open up a business account. There is no specific requirement that your business must have its own financial account but it can make things more convenient for both you and your customers. This way, they can pay you in their home currency and you can withdraw or receive your money in your own currency through your company's business account.
Business accounts come with special features like direct debits, tracking, sub-accounts etc., which speed up transactions and help keep records of what has been paid and where. Additionally, you can save a lot of money on conversion fees and international transfers if you have a business account with the local currency.
Question 6: What are the different ways to register a company in the UK?
You can either directly register a company by going through the process set by Companies House or use a company formation service to do it on your behalf.
Hiring a company formation service will ease up your process and could save you time and hassle in the long run, as they will take care of everything from setting up business accounts to filing all the correct paperwork with Companies House.