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By miguel-ingles
- In Uncategorized
Registering a company in the UK is an interesting option from a business perspective. This is because experts consider the country as one of the largest economies in the world. Moreover, forming a company here may serve as an entry point to markets in other parts of the world. In addition, tax rules are less restrictive, and the business creation system is much more agile than in other European countries.
Most Common Business Structures in the UK
Sole Trader
One person run every entrepreneurial activity under their own name. Consequently, there is no need to form a separate company. Therefore, it allows participation in different business fields.
The main advantage of working as a sole trader in the UK are the ease of paying taxes (you would only have to pay the Income Tax and National Insurance). Moreover, you will also control the assets and operations of the company.
As a counterpart, the liability of this structure is full. This means that you will face possible debts with your own goods.
Limited Company (Ltd.)
The most extended business structure in the UK. This is mainly because it presents limited liability. In other words, the assets of partners and owners will not be affected, even if the company incurs into debts.
They are subjected to the payment of the Corporation Tax, and they have to comply with the rules established by the Companies House. Additionally, they must publish periodic reports that must reflect the financial health of the company.
Limited companies must appoint a business director (who does not necessarily have to live in the UK) and the share capital must not be inferior to 1 GBP.
Other business structures that could be formed in the UK are, among others, holdings or public limited companies. You can find more information about these in this article.
First Steps to Set Up a Company in the UK
- Choose the type of business you want to form and the most appropriate structure for it. This will depend on whether you want to protect your personal assets, the company’s activities, the number of employees or the taxes you want to pay.
- Open a commercial bank account. This step fulfills two objectives: firstly, it allows separating personal and business finances. Secondly, it is necessary to comply with some fiscal and administrative requisites. Furthermore, having a commercial bank account allows you to obtain a better view of the company’s finances.
After these processes, the way of establishing the different types of structures varies. In the next few lines, we will address the next steps to follow to create a limited company and a business as a sole trader.
Steps to Set Up a Limited Company in the UK
- Choose a unique name for your business, so it follows certain established rules.
- Appoint a business director or a legal representative.
- Establish the registered office of your company. It must be in the UK.
- Write the Memorandum of Association (MoA). It must reflect the business’ denomination, the object of the company, the name and address of every founding partner, the number of shares they possess and the nominal value of each of these.
- Write the Articles of Association. Among other aspects, they must include the structure of the company, how a shareholders’ meeting will be called, how dividends and debts will be shared, or the form shares could be divided or transmitted.
- To pay the Corporation Tax, register in HMRC.
- Register the company in the Companies House.
Steps to Set Up a Business as a Sole Trader in the UK
- Apply for a National Insurance Number.
- Keep track of the revenue and expenses of the company, so you can submit the tax declaration of the company.
- If your revenue is superior to 90 000 GBP, you will have to sign up for VAT.
- Register a trade name. It will be used in official documents. Consequently, it must be unique and must comply with certain rules.
How a Company Pays Taxes in the UK
An annual tax declaration must be presented to the HMRC. You can do it online via this website.