My accountant did the company registration free for me. I'd caution against doing it yourself unless you know exactly what you are doing.
This is because, although the company creation itself is pretty simple, there are lots of legal requirements that you need to get right, and plenty of details you want to get right first time.
Just as one quick example- if you've been operating as a sole-trader, you'll probably find that there's a significant tax saving to be made by selling the goodwill and any other assets of the sole-trader to the Ltd Company. If you've been going a couple of years, this is likely to save you thousands in tax.
I don't believe its realistic for a trading Ltd company to deal with its tax affairs and annual accounts without an accountant (you may think you know what you're doing- but if you make a mistake, be aware that HMRC will be not be lenient on you just because you're not an accountant).
It costs £18 to register a company online directly. You will be sent all the appropriate forms and documentation in the post/mail. If you are at all concerned, simply fill in the form that declares the company as dormant until you are ready to trade.
That's all you need to do.
Once you trade, then there are a few things to take into account. However, at that point you are a director, and the folk you deal with at HMRC are a whole different bunch to the folk you deal with as a "mere" employee. They will be informed, and bend over backwards to assist you.
Contrary to your belief, trading as a limited company without an accountant is easily accomplished. Personally, I wouldn't recommend it, since an accountant can usually pay for himself in the saving he brings. But that doesn't negate the fact that it can be done without too much pain.
I'm sorry- I think you're wrong on this, and your advice is potentially quite dangerous.
If you're going to register a dormant company, then yes, fair enough, do it yourself.
However, if you're trading it is not easily accomplished. As a Sole Trader- yes, its simple to do.
However, anyone who claims they can produce a full set of accounts, compliant with UK accounting standards to the filling in of your CT600 and filing of accounts with Companies House is likely kidding themselves.
Yes- you may think you're doing it right, but you're not going to know until 5 years down the line HMRC open an investigation into your company and set someone who knows what they're doing onto your records.
Are you willing to take that risk with your business- cos I'm definitely not!
Yes HMRC are helpful, but they're not going to produce your accounts for you.
After looking around I used the Bronze package from Companies Made Simple. It ended up being slightly cheaper then using Companies House direct (my understanding of which is that Companies House only charges formation agents £14 per company). Both give you a PDF of the Certificate of Incorporation which you can print off yourself for the bank if they ask for it, plus if you're happy with Barclays the £50 cash back was pretty sweet.
I also used Companies Made Simple. Everything was fine with them, except that if you have non-ASCII characters in your name they will look scrambled in some of the official documents. Use an ASCII transliteration for your name instead of using non-ASCII characters.
I registered directly with Companies House a few months ago, after consulting an accountant. It was completely straightforward. I don't see any need to use a third party.
I've done both in the past, and while Companies House is straight forward, using a third party is even easier, its usually a case of just filling out a page or two form and entering credit card details.
The companies I've registered through third parties email me annually with reminders of what needs to be filled when etc, and where I've left a company dormant I can get that filed for a nominal fee and a couple of clicks of a button.
Additionally they often have cash back deals with the banks, so after opening an account I actually ended up with a profit from registering the company (about £5)
I'm facing the same problem. I'm just out of education (in the UK) and primarily doing contract work under my own name, I don't know whether getting an accountant would be beneficial, and if so, how to find one that is best for someone in my situation (and aiming to start up).
This sort of information about the basics is surprisingly hard to find, so this article is particularly refreshing.
Makes me think, I'm sure many people (including me) would be happy to pay to talk (IM) to someone who knows something about this sort of thing. Does this exist as a web service anywhere?
If you're in Scotland, Business Gateway are meant to help new (small) companies. They've been pretty useless with me so far though. I'll give them another go later. Scottish Enterprise are supposed to help "ambitious" (larger) companies.
If anyone knows a good (well, more cheap than good) accountant, I would love a reference. My company only makes a few thousand pounds a year, so it shouldn't be too much work...
I use Wellwood Hoyle associates, as do a few UK tech companies you've probably heard of (but it's not my info to post)... I've never met the guy, but I send him 90 quid a month, and he takes care of my somewhat complicated Ltd company expenses. Highly recommended.
"But before you can do that, you need to figure out which package you want. The crucial factor is that in order to open a bank account, you will need a printed Certificate of Incorporation."
This is not true. I have registered a few companies and not once did they care about the printed certificate. They will call Companies House or email them and confirm you are a director and the company exists.
Ah, your experience differs from mine, then. Every time I opened a bank account (HSBC and Lloyds too) they asked for a copy of the printed certificate of incorporation. Maybe it depends on your branch?
What is the simplest way for citizen of EU member state to create and manage UK Ltd company without ever being to UK or owning anything else there (or renting physical office)?
I'm a Greek citizen with a UK company, I created it in ten minutes on companiesmadesimple.com, who also provide mail forwarding services, if I recall correctly. The biggest pain is the accounting, but FreeAgent (the app referred from the article) sounds good, and I guess 300 GBP a year isn't too much for it.
I don't know anything about Greece, but speaking of my country of origin (Czech Republic) is quite a big problem to set up credit card payments, not speaking about much bigger administrative burden and costly process of setting up company.
As zerostar07 said, the bureaucracy alone makes it a nonstarter. In the UK I get my personal HMRC contact, whereas in Greece you have to get up at 7 am and only hope you will get whatever you want done that day.
Also, Greece doesn't generally encourage entrepreneurship that much. For example, I can't email an invoice, I have to actually mail the actual physical copy, which I have to write by hand, because I have a book of invoices stamped by the Eforia (the Greek revenue service).
Plus, setting up the UK company took 15 minutes and as many pounds, whereas I have no idea how much it costs in Greece. Friends who've done it told me to stay away.
The bureaucracy and costs make it a bad choice when your clients are not in the country. The tax law changed at least 3 times (I stopped counting) last year.
For now, yes. But if Greece leaves the Euro in order to devalue her debt (considered by many as inevitable), the contracts of Greek companies would likely be forcefully redenominated to "New Drachmars".
Of course, no one knows how this will play out, but I think it would be very hard for anyone to touch a UK limited company's contracts and sterling holdings, regardless of who it's owner is.
I have created two UK limited within a 10 year interval without putting my feet there. I recommend you not to do it alone but find a local accountant in UK + an accountant in your country who knows a bit about the UK + your country rules. It is extremely easy to create a UK company, but this creates both obligations in UK and in your country of origin. For example, in Germany, if you are the director of a UK limited, you cannot get "family" health insurance, so you need to have another job or be employed by your UK limited or go private for your health insurance.
So, take the time to see how it affects your situation in your home country.
Note: It will cost you money in all the cases, it is not something you do "just for fun" or you are going to have problems. Setting up a business is work and must be prepared thoroughly.
Whether you can own a UK company with a foreign address I don't know.
I do know many virtual offices can be your registered address. These tend to be companies that receive your mail/phone calls and forward them on to you or let you rent desks or offices for meetings in town/city centres.
As an individual you can't get a UK bank account unless you can prove you have a UK physical address. Maybe there is a way round but I doubt the restrictions are any less rigorous for businesses.
They provide registration, a UK registered office address and mail forwarding to your address outside the UK. Each of the services costs extra and I'd estimate the overhead is around 300 Euros a year.
Quick note, regarding "[c]ontrary to what some people will tell you, you can have your business registered at your home address. You can do so even if your tenancy agreement doesn't allow it (obviously, don't actually go out of your way to tell your landlord about it). I don't know anyone who has gotten in trouble because of this (though I'm sure you can find some rare examples if you try)."
I use to assess people for risk at a premier London estate agent.
We would have discovered this in our research via Company House, and if it had infringed your previous tenancy agreement (which it usually would have) we would have: (1) declined any potential tenancy outright, (2) told the future landlord that you had operated a business out of your previous address, and (3) left the final decision to the future landlord.
In the same job, I saw CCJs and Bankruptcies filed against the Landlord's property (when businesses went bust with debts to their name) because inexperienced estate agencies and property management agencies didn't properly vet their tenants.
How ridiculous. If you want to run a steel mill out of your kitchen, that's one thing, but not allowing someone to write some code for a side business in a spare bedroom?
I own multiple rental properties and these scenarios are the least of my worries.
Plus, how would a risk check know what was part of your previous tenant agreement? Do people in the UK submit their previous lease with each application?
Ryan, firstly, operating a business out of a tenetted address would not have been a concern, using that address as the registered address on Companies House would be. That can result in serious legal implications for the Landlord at a later date.
Quoting from HMRC:
"If your company or organisation's registered office is in England, Wales or Northern Ireland, HMRC will take action to recover what you owe. This may include:
(i) visiting your business premises to obtain payment or seize your business assets and sell them at auction
(ii) taking legal proceedings to collect the debt through the courts
(iii) in some extreme cases, applying to the court to have your company closed down
Remember interest is accruing from the date your Corporation Tax was due until it's eventually paid. This is on top of the Corporation Tax you owe."
The procedure would run as follows: (1) if the applicant has reported himself as self-employmed, we check whether he is registered as a Ltd. company on Company House. If so (2) we ring the previous landlord and check on any formal or informal agreement regarding using the property as a company registered address.
Our agency was being paid 10-15% of the annual letting fee for letting and managing properties, to my mind checks like these have to be made.
Edit: Usually if you do not have a respectable registered address, you should (1) use your accountant's address with his/her permission, or (2) pay for the services of an umbrella company.
I would advise that before people rush to register a Limited company they should consider operating as a sole trader. A sole trader can open a bank account, employ people, rent an office, register trademarks etc.
Also search thoroughly for your proposed company name to check for existing businesses with similiar names or trademarks. And you will probably want a domain name to match.
I would think the opposite. As a sole trader you're personally liable for the company. Above a fairly low threshold for income you have to be VAT registered as a sole trader anyway, which is the biggest headache. If you already get an accountant to do your books I see no reason at all to be a sole trader.
You only have to register for VAT if your turnover reaches about 70,000 UKP [1]. I guess there are many people reading HN who will be running a business that will not immediately reach this level. Incorporating a limited company is not the only way for them to set up a business, which was the impression given by the article:
"If you're trying to create a business, rather than just create a legal outlet for your freelancing, you will need a Limited Company."
I am just suggesting people weigh the alternatives of limited company vs sole trader. The minimum viable form of business is the sole trader. It is possible to convert from sole-trader to limited company at a later stage. Certainly consult an accountant and consider the cost and tax implications of both approaches.
When there are going to be multiple owners of the business from the start I would agree that a limited company gives clarity to your relationship and is probably better for this reason.
Why? Aren't they very similar, just an Ltd has slightly more complicated tax paperwork and provides liability protection?
Combined with the obvious benefit of having multiple people as directors.
That's a terrible idea. If you're living above the poverty line, the tax breaks for being a limited company are huge, and will pay for the overheads of accountants very quickly.
I agree, the tax position is the calculation that decides the appropriate form of your business. I'm thinking of start-up people living on noodles rather than those who already have a good income.
"As part of the company registration process, you might be tempted to come up with a lofty valuation for your shares. Don't. You'll only cause yourself hassle. Create 100 shares of £1 each and assign 1 share to each equal cofounder. You can change those numbers to reflect however you decided to set up the company. If you want to implement vesting, close this web page and get in touch with a solicitor."
This isn't the case if you register through Companies House - you have to allocate all share capital.
I found this out when using their online registration service recently - according to my accountant it's a change from the Companies Act 2006.
The Companies House registration service is definitely worth using - you'll probably get your company set up within an hour or two of filing the form. Unless you have a complicated shareholder agreement (in which case you really should get yourself a good lawyer if you don't already have one) the default Articles of Association will be fine for you.
One more thing I would like to add to this discussion is that if you register a company and are not based in Britain you will need to send notarised copies of your passport and bank statements (less than 3 months old).
This is the case if you are a director with 25% or more shareholding in the company. You are not required to hold a visa or visit the country.
This is my experience recently registering a company with two other people - I am British and the other two are Indians. I was present at the bank and registered for the account whilst the other two were overseas. Some couriered documents were required with the notarised documents as mentioned above, additionally they were required to complete a form which they signed.
They have full access to the account - online and offline - in the same way I have.
I've linked to this a lot in the past on HN, but the World Bank has a fantastic comparison on the ease of doing business in different countries - one of the sections is "Starting a Business". You can see the comparison here:
I highly recommend downloading the excel sheet, makes filtering by country easier.
One of the biggest advantages of choosing Ireland is the low corporate tax rate of 12.5%, compared to 21-26% in the UK (this is according to Wikipedia, not sure what the current rate is there to be honest). This is the reason many US tech giants, big pharma etc. locate in Ireland.
I've heard somewhere that the UK limited company is the easiest and cheapest (also in terms of capital requirements) available. In Denmark, the capital requirements for a limited company is £14,000, although setting up as a sole trader is extremely simple and completely free.
It also have the advantage over Luxembourg and Cyprus that English is the official language. And finally, it's probably worth mentioning that swombat is living in the UK.
Forget that you even read this article then. Subtract all the simplicity, multiply the hassles by 1000, and double it up, maybe once more. Allow the whole thing to stew on slow flame for months (not days) and probably now you are close to the ground reality of incorporating in India.
Practicalities: You have to contact a RoC agent (Registrar of Companies) who'll get this done for you. Depending on the type of your entity/incorporation (sole proprietorship, LLC, LLP, Company, One person company etc) the fees, time and documentation required will vary. For basic info check out http://www.mca.gov.in/ (Min of Corporate Affairs).
Beware though, really the incorporation process in India sucks donkeys balls and exhales horse farts even when going through agents.
If you want I can refer an RoC agent who presented at one of the weekend startup-meetings in Bombay. Sounded intelligent and well-versed with issues related to startup incorporating. My email is in my profile.
I'm not looking to set myself up as a company, but just out of interest, what's the difference between registering yourself and buying an off-the-shelf limited company? I've known people do it both ways.
If getting yourself registered as a brand new company is so easy, what are the advantages of buying an empty limited company and changing its name? There must be some, or people wouldn't do it.
There are two main advantages to buying an off the shelf company:
1. Having a company that appears to have been around for longer than it actually has (although it's pretty easy to find out it's history - e.g. when directors changed).
2. Getting the company name that you want. There are a number of people that form companies and register them as dormant just to squat on the name - just like people do with domain names.
Edit: forgot to add:
I'd recommend registering a fresh company. It's quick and easy. Buying a company, changing directors, making sure there's no awful legal history with it etc probably isn't worth the extra cost or effort. It's nice to have a clean slate to start with.
The advantage of off-the-shelf companies used to be much greater when the company registration process was slower and all done off-line. These days it's less relevant.
I'd advise against that, because it buffers you from knowing just how simple it is - and gets you in the habit of wasting money getting accountants to do things which you can do yourself in 10 minutes.
Do you know if I can file my own taxes? I keep everything in QuickBooks, and my company isn't really making enough money to justify spending thousands on an accountant. I wonder if I can do my own return, but the HMRC site is not helping.
On the other hand, I wonder if I can just register as a sole trader, invoice my company and enjoy the free tax bracket, as I didn't make more than that last year.
An accountant shouldn't cost more than 60 quid or so a month for a Ltd company. It will pay back the investment many many times over if he's even in the least bit competent.
On the specific question about registering as a sole trader - no this isn't the way to do it. You should be paying yourself a salary from your Ltd Co to make use of your tax free allowance. Even if the Ltd Co hasn't got the cash to pay you- this is still fine, as you will build up a balance in the Directors Loan account which you can draw down on when you need to.
Ah, thanks for the advice. I considered paying myself a salary, but then I'd have to register and pay for employee benefits, no? That's just wasted money for me, since I don't live in the UK :/
Life is much simpler as a sole trader though. As far as I can see the main reason to form a ltd company is if you want to employ people. I started a company because its the most tax-efficient way for me to invest consulting money into a future business.
But if you're going to get an accountant anyway and it's going to be free, it's a more effective use of your time to let someone else do it. Although I agree the process is pretty simple.
In many cases you should be substituting money for time, for most startups time is more valuable than money.
Anyone here who is using a UK company while not based there?
Supposedly there are some additional requirements when you're controlling a UK company from abroad. I'm interested in establishing an additional company for some of my ideas but am based in a country which requires high start up capital (Germany, Italy, Belgium, ...).
It is easy to get company registered, the issue can be getting a bank account. I have seen that UK banks do not trust a company if sole Director is a foreign company, even if from another EU state. Some have told that it is easier if Director is physical person (even if from another country). So yes, expect challenges.
This is because, although the company creation itself is pretty simple, there are lots of legal requirements that you need to get right, and plenty of details you want to get right first time.
Just as one quick example- if you've been operating as a sole-trader, you'll probably find that there's a significant tax saving to be made by selling the goodwill and any other assets of the sole-trader to the Ltd Company. If you've been going a couple of years, this is likely to save you thousands in tax.
I don't believe its realistic for a trading Ltd company to deal with its tax affairs and annual accounts without an accountant (you may think you know what you're doing- but if you make a mistake, be aware that HMRC will be not be lenient on you just because you're not an accountant).