This is it: you’ve come up with an incredible idea for a business or decided to start contracting, you’ve got the means and you’ve got the ambition.
Anybody can set up a business from their garage and start trading whenever they want to. But if you want to protect your personal finances and give your business the credibility it needs to succeed or to give yourself more contracting opportunities, you’re going to want to register your business as a limited company.
It’s pretty simple to set up a UK company online. But there are a few important things you’ve got to bear in mind before you hop right into the deep end.
This guide will walk you through our top 10 tips to help you register a company online in record time – summary provided by company formation specialists 1st Formations.
1. Make sure you’re choosing the right company structure
When you register a new company online, the first thing you’ve got to do is think hard about the type of company structure that would best suit your business.
If you’re considering setting up a private limited company, you’re generally going to have two structure options: either a limited by shares company or a limited by guarantee company.
A limited by shares company is definitely the most popular company structure. It’s ideal if you want to start up a new commercial (profit-making) business, or if you’re a sole trader looking to upgrade to a limited by shares company.
Why go for a limited by shares company? The key benefit to setting up a limited company is that it will protect your personal finances.
When you choose a limited by shares company structure, you’re creating a legal wedge between you and your business. As a result, you’ll enjoy limited liability for any business debts you might accumulate — you won’t be personally liable.
Setting up a limited by shares company will also enable you to boost your professional status by presenting your business as an established, credible and trustworthy legal entity. This will help you build your customer base, and it’ll also encourage investors and other businesses that you’re safe and reliable to trade with.
You could also go for a limited by guarantee company structure. A limited by guarantee structure is designed for charities and non-profits. There are no shareholders or shares in a limited by guarantee company, and this structure is not for businesses trying to make a profit.
All surplus income generated by a limited by guarantee company gets pumped back into the business to achieve the company’s non-profit objectives — not to pay shareholders.
Finally, you’ve got limited liability partnerships (LLPs). LLPs are designed for professionals who traditionally operate as partnerships. This might include solicitors, accountants or dentists. With this structure, you’re still gaining the same sort of limited financial liability you’d gain with a limited by shares company.
2. Make sure your ideal company name is available
Next, you’ve got to check that your company name is available. When you register a company online, you’ve got to select an official company name. That name has got to be totally unique, and there are a few rules and regulations you’ve got to adhere to.
Your company formation application won’t be approved by Companies House if your chosen name is already in use — and so you’re going to save yourself a lot of time and energy by checking through the Companies House register before you submit.
If you want help conducting your search, use our free company name check.
There are a couple of rules you’ve got to follow, which include the banning of offensive or ‘sensitive’ words. For example, Companies House will normally make case-by-case decisions on a name if it includes words like ‘royal’ or ‘trust’.
It’s also important to note that you’ll need to have the word “Limited” or “Ltd.” at the end of your name.
3. Use a professional registered office address
When you register a company through Companies House, you’ve got to include an official company address. This is referred to as a “registered office address”, and it’s where UK Government departments like Companies House and HMRC will send you important mail and notifications about your company.
The thing that you’ve got to bear in mind here is that the address you choose will be placed on the official Companies House register of companies. That means it will be published online and publicly accessible by everybody under the sun — and so if you’re running a company from your home, this could result in an invasion of your privacy in the future.
To maintain your privacy, you can opt for a professional registered office address. This address needs to be in the same jurisdiction in which you’re registering your company (like England or Scotland), and you’ve got to display your name and maintain certain statutory records at your registered office address in case you’re ever audited.
Fortunately, company formation agents like 1st Formations provide address services that enable limited companies to use our address in Covent Garden as their registered office — forwarding statutory post to the address of your choice.
4. Pick a share structure that makes sense
If you pick a company limited by shares, you’ll have to decide how many shares you want your company to be split up into. You’re going to have to issue at least one share to each shareholder, but there’s no limit to how many shares you issue.
Setting up a company by yourself? As the sole shareholder, you could choose to issue just one company share. This would represent 100% ownership of the company. Likewise, if you’re forming the company with a business partner, you might issue two shares representing 50% ownership.
No matter how many shares you issue, you’ve also got to assign a nominal value to your shares which will determine your financial liability for that share. Most shares are just given a nominal value of £1. But you can assign it any amount you want.
Just be aware that the bigger the value you assign to your shares, the higher your personal liability will be for company debts.
5. Register for VAT
Value added tax (VAT) is a UK Government tax charged on most goods and services that VAT-registered businesses provide.
VAT registration is compulsory if your turnover is about £85,000 (2021/22 threshold) within a 12-month period. Likewise, if you’re expecting to turnover more than £85,000 within the next 30 days, or you buy more than £85,000 worth of goods from EU VAT-registered suppliers, you must register for VAT.
That being said, you can also choose to register voluntarily — no matter how much your turnover might be.
If you choose voluntary VAT registration, you can reclaim VAT on goods and services you’ve bought from other businesses, and your business will be eligible for VAT refunds if you sell zero-rated products. Voluntary registration will often help boost your company’s public image, because it will make your business seem bigger and more established.
6. Set up a business bank account
If you’re registering a company, you’re definitely going to want to set up a business bank account.
It’s not a legal requirement to have an official business bank account — but it will draw a clear line between your company’s finances and your personal finances. That makes life a lot easier in terms of keeping track of your business finances, maintaining accurate accounting records, preparing your accounts, and more.
Setting up a business bank account for a limited company in the UK is a fairly straightforward process, and most banks offer a range of account types to suit your needs. You’ll normally be expected to provide a copy of your incorporation documents, personal ID and proof of address for each company director to set up an account. There will usually be a credit check, too.
If you’re setting up a UK company from overseas, it’s often difficult to fulfil residency requirements needed to set up a UK account. 1st Formations offers a solution through our partnerships with Wise and Payoneer, helping non-UK residents to get easy access to UK and international business bank accounts.
7. Understand your new filing requirements
As a limited company owner, you’re going to have new regulatory requirements to file documents and reports. It’s best that you understand those requirements in advance so that you know what you’re getting into.
- Filing your annual confirmation statement
- Completing and sending Company Tax Returns and accounts to HMRC
- Completing and sending annual accounts to Companies House
- Paying Corporation Tax
- Paying VAT
- Filing an annual Self Assessment tax return
- Notifying Companies House and HMRC if company details change
- Keeping statutory company registers up to date
Most of these requirements are pretty straightforward, but in some cases you might want help from a professional accountancy practice or company secretary service that can assist you in maintaining and completing your submissions.
8. Don’t forget to register for Corporation Tax
When you register a company online, you’ll need to register your company for Corporation Tax within three months of starting up business activities. That includes things like buying or selling goods, advertising, employing people, or renting business property.
If your company does any of these things, HMRC will view your business as an “active” company for Corporation Tax purposes. That means you’ve got to submit Company Tax Returns to HMRC — even if you’ve got no tax to pay.
9. Hiring staff? Make sure to register as an employer
If your new company is going to hire staff, you’ve got to register as an employer and set up PAYE.
You can do this by creating a Government Gateway account. You’ll then need to answer a series of simple questions using an online form to register as an employer.
When your application is processed, HMRC will send you an employer reference number and a tax office reference number. You’ll need these numbers to do your company payroll and send in your PAYE submissions to HMRC.
Don’t forget: you’ve got to register as an employer before your company’s first pay day. You can register up to two months in advance — but be aware that it normally takes up to five working days to get your PAYE reference number.
10. Use a company formation agent
Most of these steps are pretty straightforward. But when you pile everything up and take stock of all the things you’re going to need to do and remember, it’s easy to get a bit overwhelmed. That’s why you might end up saving yourself a lot of time, money and stress by registering your company through an online company formation agent.
Companies House has authorised a number of company formation agents to file electronic incorporations — and it can make life super simple for business owners.
With a company formation agent, all you’ve got to do is fill out a quick online form. Then, your agent will do all the boring bits and double check to make sure everything has been filled out correctly. This can prevent your application from getting rejected or delayed, saving you lots of time.
Likewise, going for a company formation agent also saves you money. Accountants typically charge in the region of £200 to £300 to register a company. But if you choose a company formation agent like 1st Formations, you can form a company online in a matter of hours starting from just £12.99.
Ready to learn more?
The truth is, this is just the tip of the iceberg. There are loads more tips and tricks you may want to consider when registering a company online — depending on the type of business you’re setting up, your location, corporate structure and more.
Check out the 1st Formations blog to discover everything you need to know about forming a UK limited company and giving your business the best possible chances of success.
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