Simple steps to register a company and start a business in the UK

After careful deliberation and weighing all pluses and minuses, you have decided to start your own business in the United Kingdom, a country of transparent legislation, favourable taxation and social benefits. Are you ready for a challenge? Because it is not going to be a walk in the park and there will be pitfalls that could cost you time and money if you don’t know what to look out for.

We suggest you start by choosing the right type of company that would work best for your business. It should help you minimise taxes, increase profit and integrate easier in the local business environment. Without knowing all ins and outs of the UK legal system it could be hard to make a right choice without expert advice. Therefore, it is better to talk to competent specialists before registering a company in United Kingdom.

Types of companies in the UK

Incorporation structure of your business will determine how or whether it will need to be registered with tax and other authorities, do accounts, manage relationships with employees and much more. Legal structure will depend on the area of activity and your personal preferences. Here are four most common types of UK companies and partnerships to choose from.

Limited liability company (Limited, Ltd)

This legal entity is almost independent of its owners. A company can sign contracts and agreements; it is the company that is responsible for its activities, liabilities and financial security and not its founders. The owners are also liable for the company debts, but only up to the amount of their investment or within the authorised capital.

Key feature of this type of UK company is that one and the same person can be both its owner and director. There are no restrictions as to their nationality or place of residence.

Limited companies come in two subtypes

1. Company limited by shares. This is one of the most common legal structures that would allow you to make profit and distribute it at your own discretion. Shareholders invest in a business and this determines their ownership and size of dividends.
2. Company limited by guarantee. It is a preferred structure for non-profit and charity organisations. There are no shareholders in such company. Instead, a company has guarantors that would rather reinvest profit in the business than distribute it for personal use.

In either case shareholders or guarantors are liable for company debts up to the amount of their paid-up share (nominal value) or guarantee.

Limited liability company must be registered with the Companies House as a company limited by shares or limited by guarantee.

Public limited liability company (PLC)

This company may fully belong to individuals that can sell their shares on stock exchange though they don’t have to. There are certain requirements that a PLC must comply with:

• Correct registration of shareholders and directors;
• Keeping minutes of annual meetings;
• Issue of share certificates.

Key requirements for PLC registration

• Unique name
• Shares issued for at least £50,000 (not less than 25% must be paid up)
• 2 shareholders and at least 2 directors, and a qualified corporate secretary

Financial liability of the owners of such a company does not exceed the value of their shares.

Limited liability partnership (LLP)

This legal structure is independent of its members. It can own assets, for example commercial properties, and enter contractual agreements with other companies. While LLP is not required to pay corporation tax, its partners must declare their personal income from the partnership.

Key requirements for LLP registration

• Unique name
• At least 2 partners (either individuals or corporate) that can become Designated Partners

If a partnership becomes insolvent, each partner is liable up to the amount paid upon its registration. If LLP partners are tax residents in another country outside the UK and a partnership does not trade on the British Isles, they must pay taxes only in the country of their tax residence and nothing in the UK. Besides, there is no stamp duty of a sale or purchase of a property by a partnership.

Scottish limited liability partnership (SLP)

If you look at this and previous types of partnerships in the United Kingdom, there are almost identical. However, here are key feature of SLP as opposed to LLP:

1. There must be at least 2 partners, one limited partner that cannot take part in running the business but is liable up to the amount of their investment, and a general partner that manages SLP and is liable for its debts with all their assets.
2. Minimum reporting requirements: if SLP has no activity in the UK, it is free for an obligation to file annual accounts. However, Scottish partnerships must still prepare and file their tax returns.

Key requirements for SLP registration

• Registration with the Companies House in Edinburgh
• Unique name
• 1 general partner and 1 limited partner (individual or corporate, of any nationality/jurisdiction and residency status)

Tax liabilities of both SLP and LLP are the same.

What are legal requirements for UK companies and partnerships?

Irrespective of differences between companies and partnerships in the UK, all of them must comply with certain common requirements including but not limited to the following following. The same requirements apply to all individuals and legal entities.

• To register for VAT and PAYE. The latter is a special system that the UK tax authorities (HMRC) use to collect income tax and national insurance contributions.
• To keep all documents, paperwork and bookkeeping up to date.
• To duly and timely notify the Companies House about any annual meetings, changes in registered address or shareholding structure or directorship (for legal entities).
• To pay incorporation tax on all taxable revenue and distribute profit to shareholders in the form of dividends (shareholders must also pay personal taxes on dividends).

Want to know who can be a director of a UK company? A comprehensive guide can be found here.

How to register a company in the UK hassle-free

It has become significantly easier to start a business and register a company in the UK. However, entrepreneurs must still be very attentive and careful throughout the whole process.

To register a UK company, prepare information about its owners (shareholders), directors and people with significant control (beneficiaries) and choose a unique name. Model Articles and Memorandum of Association are issued upon incorporation. If you wish, they can be customised to your needs and business structure.

How to open a UK company with Imperial & Legal?

Qualified advisers at Imperial & Legal have been providing comprehensive business support in the UK for many years. Based on our experience, we have come up with three unique products for your business needs in the United Kingdom: Standard package, Standard Plus package and Imperial package.

By choosing an appropriate solution you will get professional support starting from business incorporation and basic admin support to visa applications and account opening in a UK bank.

Learn more about expenses associated with opening and running a business in Great Britain and other countries as well as business package solutions from Imperial & Legal in this article.

Tips for UK company registration

UK laws are not always easy to work out for a beginner; the same applies when choosing a type of a company or a partnership in the UK. If you want to save yourself time and money when dealing with tax and other public authorities after registering a company in the United Kingdom, talk to professional UK tax advisers beforehand.

Book a consultation with one of the Imperial & Legal specialists and we will help you choose a type of companies in the UK and provide all necessary information. Besides, out expert team will assist you with incorporating your business in Great Britain, opening a bank account, tax planning and payments as well as other matters related to running your business in the UK and other countries.