What You Need To Know To Form a New Company?
You have a great business idea; have developed it into a salable product, carried out market research, sourced suppliers and business premises. You are now ready to form a company – right?
Hold on – there are a few important things to consider before taking this next step.
The main decision you must make is what is the best structure for your particular business? This will largely depend on the type of small business you are starting up, whether you are starting out alone or with one or more partners and how you feel about your own personal financial risk.
You can register as a sole trader or choose a public or private limited company formation. These days, many people choose to operate their business online. This can be a lucrative and cost-effective way to run a small business, often having the option to work from home with flexible hours.
It is quick and easy to register as a sole trader, and the tax liabilities can be less – but you have no personal protection if the business fails. Therefore, many businesses choose to become limited companies and enjoy the peace of mind that their private assets will not be at risk to pay off business debts.
Limited companies are more labour-intensive in bureaucratic processes. There are strict and mandatory reporting processes and management responsibilities. These obviously increase your costs. All new companies must be registered at Companies House.
When you form a company, the minimum information you must provide is:
- Company name and address
- Officer details – Director and Secretary
- Share Capital and Shareholder details
There are three ways to form a company:
1. Companies House Web Incorporation Service (for a private company limited by shares, with model articles
2. Employing a Formation Agent – these agents can provide specialist advice to help you incorporate any company structure
3. In hard copy by completing the necessary forms and forwarding them to Companies House.
Companies House operates a Web Filing system to enable companies to safely file information online. This is a cheap option for Annual Returns (£13 rather than £40 for paper filing). Annual accounts can also be filed, director and secretary information and any changes to your registered office address can be amended using this system.
Companies House also operates a software filing system where companies can electronically submit statutory documents. They will be validated for compliance with the Companies Act and a notice of acceptance or rejection issued.
They operate information centres and a contact centre where experienced staff can advise and answer customers’ queries. Products can be ordered, forms obtained, documents filed and new companies incorporated.
Other useful services provided by Companies House include:
WebCheck: A free Company Names and Addresses index. You can purchase any company’s information, including accounts, annual returns and reports viewable online
Companies House Direct: Comprehensive search tool which allows you to download company details from your PC. This is a subscription service.
Monitor: Just enter your email address and details of the companies you are interested in. When there is any new information registered in relation to your chosen companies, you will receive an e-mail alert.
DVD ROM Directory: Basic company details on more than 2million active registered companies in the UK. This is produced monthly and costs £30, or £300 for an annual subscription.
Free Mobile App: Allows searches on more than 2.7million companies from your mobile device.