A Sole Trader is a person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but personally liable for all losses. Their personal assets can be at risk if they cannot pay their creditors. This is probably the most common type of business.
A registered company is a legal entity with a separate identity from those who own or operate it. Most companies are limited liability companies which means the liability of the members is limited by shares or by guarantee.
A limited company is a separate legal entity in its own right and the liability of the owners is limited to the amount of share capital (including any amounts unpaid on the shares that you have been issued). Many customers and lenders would rather trade with a registered company than with an individual.
There are various types of company that you can register, depending on your requirements:
Please contact our specialist team for any assistance with choosing the company type. We are here to help you.
An off-the-shelf company or ready-made company is one that has already been formed at Companies House. It has a registration number and is ready for immediate use. The company is ready to be transferred to the buyer. Some people prefer aged companies as they create a sense of longevity.
Once company incorporation documents have been submitted to Companies House, the time to incorporate depends on Companies House but it typically takes less than one day for a new company to be registered. Companies House is closed over weekends and public holidays.
Your company can start trading as soon as it has been registered at Companies House.
Yes, you can choose any name you like as long as it is not already registered, ‘same as’ or ‘too like’ an existing company name, or likely to cause offence. Some words in company names are also restricted or forbidden, these are called ‘sensitive words’.
Remember that you must include the word ‘limited’ or the letters ‘ltd’ at the end of your company name.
By law every company must have a registered office. The registered office address is the ‘home’ of the company to which all official documents, notices and court papers have to be sent by law. This address must be a physical location for the delivery or inspection of documents. It cannot be a PO Box number (unless contained within a full address), a DX or LP number. It is quite common to use a director or company secretary’s home address as the registered office address.
Should you not want your home address to be displayed on public record, 1st Choice Incorporations offers registered office addresses in London and Cambridge. There is a small annual fee for this service and that includes forwarding mail from Companies House and HMRC to your preferred forwarding email and postal address.
One or more persons can form a company for any lawful purpose by subscribing their name(s) to the Memorandum of Association and complying with the legal requirements for incorporation. Those persons who subscribe their names to the Memorandum of Association are known as ‘subscribers’ and are the first shareholders of the company.
Anyone over the age of 16 who has not been disqualified from acting as a company director and has not been declared bankrupt can become a company director unless they have been specifically banned from doing so as a result of legal proceedings against them.
The service address is a location where official documents and notices can be delivered (serviced) for the attention of an officer (director or secretary) of the company. The address information provided for a service address will appear on the public record. A company’s registered office address can be used as the director’s service address.
The residential address is the home address of each director. The residential address information will not appear on the public record, so long as it is provided within the address fields of the residential address section and is not used as a service address.
There is no legal requirement for a private limited company to have a company secretary, but many limited companies still choose to have one. A private company secretary doesn’t need any qualifications. It is a requirement for a public company to have a qualified company secretary.
When people form a company, they decide whether to limit the members’ liability by shares. Share capital is the money invested in a company by the shareholders in exchange for a number of shares of a specified nominal value the company issues to its shareholders.
A shareholder is the registered owner of shares in a company. A shareholder is also referred to as a member of a company.
These are the people that have significant influence or control over the company. The nature of control is determined by the person or legal entity (such as a company) meeting one or more of the following:
The Memorandum of Association is a legal statement signed by all initial shareholders (subscribers) or guarantors agreeing to form the company.
The Articles of Association are the written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary. In short, the Articles set out how the company is run. There are model Articles that can be submitted to Companies House on incorporation. However, any company can have bespoke Articles.
Our specialist team can assist you with choosing the Articles for your company.
A certificate of incorporation is the document issued to confirm that Companies House has incorporated your company and states:
A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits. The key thing is the business survives with the partners if one retires, quits or dies then the partnership can no longer exist. Partners provide the funds for the business out of their own money.
There are three main types of Partnerships:
General Partnership (GPs) – This is the simplest form of partnership. A general partnership is defined as two or more people ‘trading in common with a view to profit’. A general partnership provides a relatively simple way for two or more people to own and manage a business together, each contributing capital, skills and time. This is very similar to a sole trader.
Limited Partnership (LPs) – A limited partnership is a business association of one or more ‘general partners’ alongside one or more ‘limited partners’. A partner can, however, be an individual or a company.
The general partner or partners manage the business, controlling day to day operations and making the necessary decisions, including any binding decisions. They are personally liable for the partnership’s debts and other obligations.
Limited partners contribute monies to the partnership. Although they maintain a right to a share of its profits, they do not have control over the business and each limited partner’s personal liability is capped to the amount of their investment. The limited partner’s personal assets cannot be accessed by creditors.
A limited partnership must be registered under the Limited Partnerships Act 1907.
Limited Liability Partnership (LLPs) – Also known as an LLP, a limited liability partnership is much like a normal partnership, the difference being in the potential liability. Partners will only be liable up to the amount that they personally put into the business.
The LLP has to be registered with Companies House. There must be a minimum of two ‘designated members’ on which various responsibilities are placed including signing accounts, preparing and delivering the annual return to Companies House and acting on behalf of the LLP if it is dissolved for any reason.
As with a standard partnership, partners in an LLP fund the business out of their own pocket, sharing profits, decision making and day to day running.
LLPs are often used by accountants and solicitors. They allow the individuals in the company to operate independently but to share some of the protection offered by being a limited company.
Following the incorporation of a Company, the directors have a legal responsibility to keep statutory records, known as the statutory registers. These books contain an up to date record of:
Minutes of all meetings must also be kept.
Every year a confirmation statement confirming the company’s details must be filed at Companies House.
The directors have a responsibility to keep company accounts and accounts have to be filed at Companies House every year.
The Company must also file tax returns with HM Revenue and Customs and pay relevant taxes.