There are various types of company structure in the UK. The most common type is the limited company which can be ‘limited by shares’ or by ‘guarantee’. There is also the business partnership.We’ll explain these in detail and show you how to register a company UK.
What is a company limited by shares?
Usually it’s one that makes a profit. Legally, it is distinct from the people who run it, has separate finances and is entitled to retain the profits after paying tax. It is owned by shareholders who have certain rights.
What is a company limited by guarantee?
Most often a company that is ‘not for profit’. Similar to a limited company in that it is legally distinct from the people who run it and has separate finances. The difference is that it has guarantors and a ‘guaranteed’ amount of capital instead of shares and shareholders, and it reinvests profits in the company.
What is a business partnership?
One in which you and your partner(s) share responsibility for your business, such as losses that are incurred and the cost of buying stock or equipment. A partner could be a ‘legal person’, e.g. a limited company. A ‘nominated partner’ will be chosen who will be responsible for managing the partnership’s tax returns and keeping business records.
A minimum of one ‘general partner’ and one ‘limited partner’ must be appointed. Each has different responsibilities and levels of liability for debts.
Limited liability partnerships (LLPs)
This type of company can be set up by a minimum of two members; a person or a company, (‘corporate member’). Each member is not personally liable for any unpaid debts. The members must have an LLP agreement which determines how the LLP will be run; and register the LLP with Companies House.
Choosing a name for a private limited company
The name you choose cannot be identical to or ‘too similar to’ the name of a registered company or an existing trademark, and must end in ‘Limited’ or ‘Ltd’. You can check the register at Companies House to ensure you don’t inadvertently copy an existing name and see the definitions of offensive and ‘sensitive’ words.
You can use a different name (business name) from your registered name, but it must not be identical to an existing trade mark or include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’. If you want to prevent people from trading under your business name, you will need to register it as a trade mark.
Appointment of directors and a company secretary
A limited company must have at least one director but not necessarily a company secretary. A director’s duties include: following the company’s rules in accordance with the articles of association; keeping company records and reporting changes; filing accounts and the Company Tax Return; informing shareholders if they stand to benefit from a transaction the company makes; and paying Corporation Tax.
A director must be 16 years old or over and not be disqualified from being a director. His company must have a UK registered office address and a service (correspondence) address which will be publicly available.
A company secretary can be a director but not the company’s auditor or an ‘undischarged bankrupt’, unless they have permission from a court of law.
Shareholders and guarantors
There needs to be a minimum of one shareholder or guarantor, who can be a director. Most companies have ‘ordinary’ shares which means directors are allowed one vote on company decisions per share and receive dividend payments.
When you register your company, you will need to provide a ‘statement of capital’ which shows the number of shares of each type, if more than one, their total value (share capital) and the names and addresses of all shareholders (subscribers or members).
In addition, ‘prescribed particulars’ will be required: information on the rights each class of share confers on the shareholder; the share of dividends to be awarded; whether shares can be exchanged for money; voting rights on company matters and how many votes shareholders are entitled to.
Guarantors promise an agreed amount of money – the ‘guaranteed amount’ – in the event the company cannot pay its debts. As you decide how much they pay, the guaranteed amount bears no relation to how much the company is worth.
PSC requirements for companies and limited liability partnerships
You must notify Companies House if there is a person of significant control (PSC) who exerts a substantial influence or control over your company. For instance, one who holds more than 25% of a share in a company or the right to participate in more than 25% of the surplus assets of an LLP, or can appoint or remove a majority of directors. You must identify such a person and record their details on your company’s PSC register.
Documents showing how your company will be run
When you register a company you will need to provide a ‘memorandum of association’ (MoA), a legal statement signed by all initial shareholders or guarantors, and ‘articles of association’, written rules concerning the running of the company agreed by the shareholders or guarantors, directors (and the company secretary).
If you register online, the MoA will be created automatically as part of your application. If you register by post, download the MoA template. Standard articles of association (‘model articles’) can be used or create your own and upload/send with your registration.
Records must be kept of: directors, shareholders and company secretaries; the results of shareholder votes and resolutions; debentures (promises a company makes to repay loans on a specific date and to whom); indemnities (promises a company makes to pay compensation for its mistakes); transactions (when shares in a company are bought); and loans or mortgages which are secured against the company’s assets.
Records that must be kept include: the total money received and spent by your company; assets owned; debts your company owes or is owed; stock owned at the end of the financial year and the stocktaking used to determine that figure; all goods bought and sold and from whom bought and to whom sold (unless you operate a retail business).
In addition, in the case of money spent, receipts, petty cash books, orders and delivery notes. And for money received, invoices, contracts, sales books and till rolls, as well as bank statements and correspondence.
Records must be kept for six years from the end of the last company financial year in question.
Registering your company with Companies House
You will be registered for Corporation Tax at the same time as you register your company UK. You will provide three pieces of identity about yourself and your shareholders or guarantors such as place of birth, NI number and passport number.
The fee costs £40 and can be paid by debit or credit card or PayPal. Your company will be registered within 24 hours and you will receive a ‘certificate of incorporation’ which confirms that your company exists legally and bears the company number and date of formation. You must register by post if you do not wish to include ‘limited’ in your company name.