How to incorporate?
Registering a company
Many people choose to use a company agent or solicitor to make the initial filings, set up statutory books, and draft the initial resolutions and other documentation needed to get a new company up and running.
Others may purchase a "shelf company," which is a company that someone has already formed for the purpose of simply selling it on. A shelf company should be a "clean" company -- without any assets or liabilities and no trading history.
You can, of course, register a company on your own. To start, you will need to select a name and ensure that it isn't already in use. You can check a proposed name online, for free, at the Companies House website , which will tell you whether a UK limited company or LLP is already using the name.
Once you've selected a name, the next step is for you to complete and file Form IN01 with Companies House, together with the initial Memorandum and Articles of Association for the company and the application fee of £20. On Form IN01 you submit information about the company's initial directors, share capital, registered address and so forth.
If you draft the Memorandum and Articles of Association yourself, you should start with a good, up-to-date precedent document. As there have recently been significant changes to company law -- with the Companies Act 2006 having taken effect in stages over the past few years -- you should only use recent precedent documents.
In addition to the form and documents that you file with Companies House, you will need to prepare statutory books for the company, with the required initial resolutions and registers.
You can purchase precedents and good, all-in-one statutory books from company agents. Many people find, however, that it is simpler and more cost-effective to have a company agent handle the entire incorporation process, and then provide you with a set of complete and up-to-date statutory books as soon the company is registered.
Additional requirements for a PLC
It is somewhat unusual for a small business owner to incorporate her business as a PLC (which stands for "public limited company") but in some circumstances it may be necessary or advantageous to do so.
To register a public limited company, you will need to take the steps required to register a private limited company, and in addition you will need to ensure that the company has at least two directors and a qualified company secretary.
To commence business, a PLC must have a "trading certificate" from Companies House. If the PLC trades without one, the directors can be prosecuted for a criminal offence and will be personally liable for the company's debts. To get a trading certificate, the PLC will need to meet the minimum capital requirement and will need to certify to Companies House that it does so, using Form SH50 .
Limited Liability Partnership (LLP)
The steps you take to incorporate an LLP are similar to those you would take to incorporate a limited company. You begin by choosing a name, and verifying that the name is not already in use. Once you've selected the name, you file Form LL IN01 at Companies House and pay a £20 filing fee. You do not need to file a partnership agreement or other documentation.
In the Form LL IN01, you need to provide the details of at least two "designated members." These are partners who have additional legal responsibilities, which include the obligation to sign the partnership accounts and file them with Companies House. Every LLP must have at least two designated members, and must update Companies House if there are any changes to the designated members.
You will probably need to give more time and attention to your partnership agreement than you would for the "standard" form Memorandum and Articles that many companies use. In most circumstances, you will need some professional advice in drafting the partnership agreement for the LLP -- although it is possible (albeit generally unwise) to have no written partnership agreement and simply rely on an oral agreement between the partners.
Other types of entities
Limited partnerships (as distinct from limited liability partnerships) are required to register with Companies House, and use a very basic registration form to do so ( Form LP 5 ). It would, however, be somewhat unusual for a small trading business to be established as a limited partnership.
General partnerships are not required to register with Companies House, but they may need to register with HM Revenue & Customs.
There are a wide variety of other legal entities in the UK, most of which are used primarily for charitable or other not-for-profit enterprises. Some examples of these are companies limited by guarantee, community interest companies, right to manage companies, industrial and provident societies, and charter companies. Companies House handles registration for some of these, and some of them register by other means (charter companies, for instance, apply for registration via the Privy Council).
If you are not experienced in dealing with Companies House (and in some cases, even if you are) a company registration agent, solicitor or accountant can provide a cost-effective means of ensuring that you register your company correctly. Most company registration agents register lots of companies each day and will also have shelf companies available for purchase. So when you use their services, you get the benefit of their experience, efficiency and economies of scale.
It might also make sense to use a solicitor or accountancy firm to register your company, particularly if you intend to have a continuing relationship with the firm. They can keep the company's statutory books, update them as necessary, and ensure that the company makes all of the required filings on time. Many small businesses do not have the in-house resources to take care of these matters themselves. Frequently they neglect the small company secretarial tasks until they come to the fore when the business raises capital or is old -- and at that point are faced with an expensive and stressful remediation project!
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