In case you are planning on starting a business in the United Kingdom, or you just want to expand your existing business in this country, you should form a company. The process of formation of a company in the UK is simpler compared to many other countries, but you still have to be aware of some things that can accelerate or slow down this process. We will use this article to explain these things.
Types of Companies
The UK law allows the formation of four different types of companies. First of all, there are private companies limited by shares. As the name suggests, these companies have shareholders and their liability is limited to the size of their shares. They can have just one subscriber.
Next, there are private companies limited by guarantee. The difference between these companies and the ones limited by shares is in the shareholders’ liability. Obviously, in this case, it is the guarantee that covers possible losses. Once again, these companies can have just one subscriber.
There are also public limited companies where the company’s shares are offered to the public. This means that every individual can become a shareholder. The liability is closely related to the value of their shares. The public limited companies must have two subscribers. Finally, there are private unlimited companies are companies where shareholder’s liability is unlimited. This means that they are in a similar position as sole traders and partnerships.
Formation of a company in the UK: who is eligible?
According to the UK’s Companies Act, one or more than one individuals can form a company for a specific purpose by subscribing to the company’s association memorandum. The law uses the term “person”, not individuals and this term includes companies and individuals. It’s good to point out that the law also states that any private unlimited company or public limited company should have two or more subscribers.
Selecting a business name
During this process, business owners have to select a name for their company. According to the law, the vast majority of business names are appropriate as long as they are not used by someone else. In addition, the name of the business can’t be too similar to an existing business name. The suffixes unlimited and limited can’t be used in the beginning of the name (only toward the end). Finally, these names can’t sound hostile and can’t use the word international until they are verified as international businesses.
How to form a company in the UK?
Company formation in the United Kingdom is simple. But, in case you want to do this on your own, you should be prepared to fill some forms and send a lot of documents to the Companies House. In addition, you have to take care of the registration fee. The best idea is to use a company formation agent from a reputable company formation agency. Formation of a company with their help can save you time, money and energy.