Company Formations

How does a limited liability structure work? 

Limited liability is a legal structure established by the Companies Act companies use to protect shareholders from personal responsibility for a company’s debts and obligations. The company is solely responsible for fulfilling its financial commitments in limited liability business structures.

If the company cannot meet its debts, shareholders only risk losing their investment in the business while their personal assets remain safeguarded. This separation of personal and business liability offers vital protection for entrepreneurs, encouraging them to invest and grow their ventures with reduced financial risk.

What are the disadvantages of limited liability?

While limited liability offers many benefits, it also comes with some disadvantages compared to a sole trader business:

• Increased compliance requirements: To prevent abuse of limited liability protection, businesses must meet obligations like filing confirmation statements and annual accounts, ensuring accountability.
• Minimal privacy: Company financials and filing histories are publicly accessible, promoting transparency as a trade-off for limited liability.
• Extensive formation requirements: Registering a limited company involves meeting several criteria, such as providing a registered office address and a director's service address, verifying identity, and submitting a memorandum and articles of association.

These factors add complexity and responsibility for limited liability businesses.

What does unlimited liability mean?

Unlimited liability means there is no legal separation between the business and its owner. This means that if the business becomes insolvent or is sued, the owner is personally responsible for all the debts and obligations. If the venture cannot meet any of its obligations, creditors can pursue the owner's personal assets to recover what is owed. This structure poses a significant financial risk to the business owner.

What is a private company limited by shares (LTD)?

An LTD is a standard business structure in the UK in which shareholders enjoy limited liability, restricted to the amount they invest in the company, in case of insolvency. Due to its flexibility and protection, this structure is popular among small businesses and startups. 

Key features include:

• Limited liability protection shields shareholders' personal assets from business debts.
• Separate legal entity ensures the company operates independently of the business owner or owners.
• Shareholders can also serve as directors, allowing individuals to retain full control of the business.
• Nominal share capital makes it accessible for small businesses to set up with minimal financial outlay.

An LTD provides a balance of financial liability protection and operational flexibility, making it a preferred choice for entrepreneurs aiming to safeguard their personal assets while growing their businesses.

What is a public limited company (PLC)?

A public limited company (PLC) is similar to a private limited company, with its shares being publicly traded on the London Stock Exchange, allowing the company to raise capital from the public. Key characteristics include:

• Limited liability protection means shareholders are only liable for their investments.
• Separate legal entity, providing the company with legal independence from its shareholders.
• It requires a minimum of two shareholders, one director, and a company secretary, ensuring a balance of oversight and management.
• Must have a minimum share capital of £50,000, of which at least 25% must be paid before trading begins.

A PLC provides opportunities for growth and increased public confidence but requires strict regulatory compliance and transparency.

What is a limited liability partnership (LLP)?

A limited liability partnership (LLP) is a legal structure where at least two individuals form a partnership. The LLP provides limited liability protection, meaning partners are not personally responsible for business debts beyond their contributions. 

However, it is a pass-through entity for tax purposes, so partners pay taxes individually, even though the LLP itself must file returns. This structure offers flexibility, as partners can manage the business directly without the need for directors or shareholders. 

LLPs have similar formation requirements to private limited companies, including a registered office address and registered email address. For smooth operations, it is strongly recommended that a partnership agreement be established to outline roles, responsibilities, and profit-sharing arrangements.

What is a company limited by guarantee (CLG)?

A company limited by guarantee (CLG) is a structure designed for non-profit ventures, such as clubs, charities, and community organisations. The owners, called guarantors, limit their liability for the company’s debts to a nominal guaranteed amount, usually £1 or another minimal sum.

Unlike companies with shareholders, CLGs do not distribute profits; all income is reinvested into achieving their objectives. Any surplus assets must be transferred to a similar non-profit organisation upon dissolution and cannot be distributed to the guarantors. 

Key features include:

• Limited liability protection ensures guarantors are not personally liable beyond their guaranteed amount.
• Separate legal entity, giving the organisation a distinct legal identity.
• Guarantors instead of shareholders, reflecting its non-profit focus.
• Requires at least one director to oversee its management.
• Nominal share capital reflects its focus on non-commercial purposes.

What are the advantages and disadvantages of limited liability companies?

Limited liability companies come with many benefits but also a few challenges. Here’s what you need to consider:

Advantages

• Personal assets are protected as liability is limited to the value of shares.
• A registered company adds professionalism and credibility.
• Access to tax reliefs and allowances otherwise not available to sole traders.
• Operates as a separate legal entity, allowing it to own property and enter contracts.
• It is easier to attract investors or raise capital by issuing shares.

Disadvantages

• Registration with Companies House involves additional costs.
• Stricter compliance requirements with transparency and regulation obligations.
• Administrative tasks include maintaining a registered office and filing tax returns and annual accounts.
• Extracting profits is more complex, with strict rules separating business and personal finances.
• Engaging professional accountants is often necessary, increasing operational costs.

This structure is ideal for businesses needing liability protection and credibility but requires careful management of its responsibilities.

What are the forms of limited liability business structures?

There are five common types of limited liability business structures:

• Company Limited by Shares: Owned by shareholders, with liability limited to the value of their shares.
• Public Limited Company (PLC): A company that can trade shares publicly on the stock market, with liability limited to shareholder investments.
• Company Limited by Guarantee: Typically used by non-profit organisations, personal liability is limited to a pre-agreed amount each member guarantees.
• Limited Liability Partnership (LLP): A partnership where members have limited liability and share profits based on their agreement.
• Limited Partnership (LP): A structure with at least one general partner with unlimited liability and one or more limited partners with liability restricted to their investment.

Each structure offers unique advantages and is suited to different business needs.

Limited liability protection explained.

Limited liability protection is a legal concept in company registration that separates the business from its founders in the eyes of the law. This means the founders are not personally responsible for the company’s legal or financial obligations beyond their invested amount. In other words, their personal assets are protected from business liabilities.

To establish this legal separation and secure limited liability protection, a business must:

• Formal registration with a unique name and address
• A defined ownership structure with shareholders or members, with liability limited to their investments 
• Articles of association and a partnership agreement 
• Separate financial accounts 
• Compliance with obligations specified in their respective laws on issues of filing and tax

This ensures the business operates as a separate legal entity, safeguarding the personal assets of its founders.

What is the main characteristic of an LLP according to the Limited Liability Partnership Act of 2000? 

The defining characteristic of a Limited Liability Partnership (LLP) is the liability protection it offers to its members. Members are shielded from personal responsibility for the partnership's debts and obligations, with their liability typically limited to their investment in the LLP. However, all members may still be liable for the wrongful acts of another partner if those acts were performed within the scope of the partnership.

See also: What does limited liability mean?

What are the benefits of an LLP? 

An LLP offers unique features that set it apart from other business structures. It provides flexibility, protection, and confidentiality for its members. 

Below is an overview of its most notable benefits: 

1. Separate legal entity — A key characteristic of an llp and an offshoot of the limited liability principle is that an LLP is a separate legal entity from its owners. This means the LLP has its legal identity and can enter into agreements, own property, and conduct business in its name. This separation protects the personal assets of its members, as the LLP itself is responsible for its obligations and liabilities.
2. Appointment of a designated partner - During the formation of an LLP, the partners must appoint at least one designated partner responsible for critical administrative and compliance tasks, such as:some text
   • Preparing and filing confirmation statements and annual accounts.
   • Reporting changes, such as a change of address, to Companies House.
   • Appointing an accountant or auditor as required.
   • Overseeing the statutory compliance of the partnership and its members.
3. Tax principle - An LLP operates as a pass-through entity for taxation purposes. This means that the LLP itself does not pay tax on its profits. Instead, the profits are "passed through" to the individual members, who are taxed on their share of the profits. Each member must file a self-assessment tax return to report their income.
   In addition to the members' tax obligations, the LLP must file an annual partnership tax return through the self-assessment system to declare the overall profits and distribute them among the members.
4. ‍Profit distribution - The partnership deed governs how members distribute profits in an LLP. Unlike in a limited company (Ltd), where profits must typically be distributed according to shareholding percentages, an LLP allows for greater flexibility. Profit distribution can combine fixed shares and discretionary amounts, enabling members to agree on arrangements that best suit the partnership's needs and contributions.
5. ‍Confidentiality — An LLP allows professionals to maintain confidentiality regarding partnership arrangements and profit distribution. Unlike an LTD, whose articles of association are publicly accessible on the Companies House register, the terms of an LLP's partnership deed remain private.

See also: What is the difference between ltd and limited in a company name?

What are the disadvantages of an LLP?

While an LLP offers many benefits, it has certain drawbacks, particularly regarding reporting, disclosure, and taxation.

1. Complex reporting requirements - Due to its limited liability status, an LLP has reporting obligations similar to those of a limited company. These include:
   • Maintaining a registered office address.
   • Keeping a statutory register, including details of persons with significant control (PSCs).
   • Filing annual confirmation statements.
   • Reporting changes to Companies House, such as member details or address updates.
     These administrative responsibilities can be time-consuming and require additional resources to manage effectively.
2. Disclosure requirements - An LLP must disclose specific information publicly, which can disadvantage those prioritising privacy. This includes:
   • Names, month and year of birth, and service addresses of members.
   • Details of persons with significant control (PSCs).
     This lack of complete confidentiality can deter professionals who wish to keep their business arrangements private.
3. Taxation of profits - Profits in an LLP are taxed in the year they are earned, irrespective of whether they are distributed to members or retained within the business. Additionally, LLP members are subject to National Insurance Contributions (NICs) on their income.
   This taxation structure makes LLPs less tax-efficient than limited companies, where profits are taxed only when extracted (e.g., through salaries or dividends). This difference can result in a higher overall tax burden for some businesses for LLP members.

Read more: Register Your Company and Get a Certificate of Incorporation

What is the role of an LLP partner? 

The role of an LLP partner is typically defined in a partnership agreement and encompasses responsibilities that often mirror those of a company director, particularly in statutory compliance. Partners are collectively responsible for the business's effective management and strategic direction. 

Their primary responsibilities include:

• Overseeing the business's daily operations to ensure smooth functioning and alignment with its objectives.
• Setting the overall direction of the business by defining goals, formulating procedures, and driving long-term growth strategies.
• Ensuring compliance with all legal and regulatory requirements, such as timely filings, accurate record-keeping, and adherence to self-assessment tax deadlines.
• Acting in the best interests of the business, its clients, and other partners, maintaining trust and fostering collaboration.
• Overseeing financial matters, including the distribution of profits and losses, while ensuring the business's financial stability.

An LLP partner’s role requires a balance of operational management, strategic leadership, and a commitment to the partnership’s legal and financial obligations.

What are the tax advantages of an LLP? 

LLPs offer several tax advantages compared to limited companies, making them an attractive business structure for many professionals and entrepreneurs. Key benefits include:

• An LLP is a pass-through entity, meaning the tax obligations are passed directly to the partners. Partners are taxed on their share of the profits at personal income tax rates, avoiding the double taxation faced by limited companies, where the company pays corporation tax and directors pay dividend tax.
• Income tax brackets can often be lower than corporation tax rates, providing additional tax efficiency for many LLP members.
• LLPs allow profits to be distributed flexibly, reflecting each partner's contributions, skills, and other merits. This flexibility is unlike limited companies, where profit distribution is typically tied to shareholding percentages.
• LLP partners are not subject to benefits-in-kind taxes, often applicable to directors of limited companies for perks like company cars or private health insurance.

These tax advantages make LLPs an appealing option for businesses seeking flexibility in profit distribution and more streamlined tax obligations.

Do LLP partners pay tax?

Yes, LLP partners must pay tax and National Insurance Contributions (NICs) through the self-assessment system. Partners are taxed on their share of the LLP’s profits, and they must ensure they meet the self-assessment deadlines set by HMRC for notifying liability and settling their tax bills.

What are the advantages of forming an LLP over a traditional partnership, limited partnership or private limited company?

An LLP offers a unique structure that differentiates it from traditional partnerships, limited partnerships, and private limited companies. These differences provide advantages, including greater flexibility, liability protection, and tax benefits.

See also: Company Limited by Guarantee

What are the differences between LLPs and limited companies?

What Are the Differences Between LLPs and Limited Companies?

While LLPs and limited companies (LTDs) offer limited liability protection, they differ significantly in structure, reporting obligations, taxation, and profit distribution. The table below highlights the key differences.

Why do some uk companies use 'ltd' or 'limited' in their names?

In the UK, private limited companies are legally required by section 59 of the Companies Act 2006 to end their names with "Limited" or "Ltd" to indicate limited liability status. This suffix signals that the company is its own legal entity, with shareholders protected from personal liability if the business faces financial issues. Welsh companies may use the equivalents "cyfyngedig" or "cyf."

Without one of these suffixes, Companies House will not register the company unless it meets specific exemption criteria.

According to Section 59 of the Companies Act 2006, private limited companies in the UK must end their names with either "Limited" or "Ltd" to indicate their limited liability status. Welsh companies can also use "cyfyngedig" or "cyf." However, if a company name does not contain the appropriate suffix, Companies House will refuse its registration unless it qualifies for an exemption.

Are there companies exempted from using Limited in a company name?

Certain companies— particularly those limited by guarantee —can be exempt from adding "Ltd" or "Limited" to their names. 

To qualify, these companies must operate with specific objectives in their articles of association, such as promoting commerce, education, charity, or other community-benefitting pursuits. Additionally, they must meet several conditions:

1. Income allocation: All profits must be directed toward the company’s stated objectives.
2. Prohibition of payments to members: No dividends or returns of capital can be paid to members.
3. Asset transfer upon dissolution: In the event of winding up, assets must be transferred to an organisation with similar objectives or one that promotes charitable causes.

Other entities may use different suffixes. For example:

• Public Limited Companies use "PLC."
• Limited Liability Partnerships use "LLP."
• Sole traders with trading names do not use a suffix.

These distinctions allow companies to represent their structure and purpose accurately.

What is the difference between LTD and Limited?

The difference between "Ltd" and "Limited" is purely stylistic—“Ltd” is simply an abbreviation of “Limited.” Private limited companies commonly use either of the terms to show limited liability status. The choice depends on the company’s preference and doesn’t affect the company’s legal standing or obligations.

Once you choose your preferred suffix, it will appear at the end of your business name in your certificate of incorporation and on the Companies House register.

How do I determine whether to use Limited or ltd at the end of your company name?

You can use "Limited" or "Ltd", depending on which fits your brand’s style best. Legally, there’s no difference, and both indicate limited liability status. While "Limited" may feel more formal, many formal brands opt for "Ltd" as well—so it comes down to your personal preference!

Are 'ltd' and 'limited' interchangeable?

While “Ltd” and “Limited” can generally be used interchangeably without issue, using the version you registered with Companies House on all official documents and legal correspondence is essential. Consistency with your registered name is required in the following instances:

• Physical signs (e.g., in shops or commercial offices)
• Your registered office address or any operating business location (excluding your home if used privately)
• Stationery, including official documentation and websites
• Promotional materials

Following this practice helps maintain compliance and ensures clarity in all official interactions.

Looking to start a business in the UK? Consider this your essential guide to small business ideas that can significantly boost your finances while positively impacting your community. Whether you're considering a simple venture like a Virtual Assistant service or a more complex operation like market research or homecare services, we’ve got you covered with multiple business ideas to explore. Each section outlines the essential skills to help you assess your readiness, startup costs, and the ideal business structure. 

Quick Tips for Starting a Small Business In the UK

High Skill Unique Business Ideas

As we delve deeper into the digital age, businesses' challenges are evolving at a pace that’s never been experienced before. The business ideas in this section stand out because they directly tackle the most pressing issues and rapidly growing concerns of our time. These ideas aren’t just limited to niche markets; they offer solutions essential for the growth and success of every organisation—and even individuals—in today’s digital landscape.

According to the UK Department for Science, Innovation, and Technology, many businesses and charities experience cyber attacks annually, illustrating the need for adequate protection. Cyber threats such as phishing, impersonation, and malware are not just technical nuisances—they pose serious financial risks and operational disruptions, particularly for medium and large organisations. As the frequency and impact of these breaches continue escalating, the demand for specialised cybersecurity services is rising. 

The infographic below presents key statistics and insights on the most common types of cyber attacks, their impact on organisations, and the financial consequences of breaches. These growing threats highlight a significant business opportunity in the cybersecurity industry. By setting up a cybersecurity-focused business, you can play a crucial role in addressing these challenges, helping organisations protect their valuable data and maintain operations in an increasingly digital world.

This presents a unique and timely opportunity for entrepreneurs to establish cybersecurity-focused businesses that address these critical needs.

The possibilities are vast, from threat detection and vulnerability assessments to compliance consulting and incident response. Depending on their expertise and market demand, this variety allows business owners to target specific niches or provide comprehensive solutions.

• A cybersecurity venture is one of the best business ideas to start in the UK because of its scalability. Entrepreneurs can start small, offering specialised services to a few clients, and gradually expand their offerings and client base as they gain experience and recognition in the market. This flexibility makes it attractive for those looking to grow a business over time.
• Unlike some industries vulnerable to economic fluctuations, cybersecurity remains a priority for businesses regardless of the economic climate. Protecting digital assets and sensitive data is essential, making cybersecurity services indispensable even during downturns. This resilience makes a cybersecurity business a stable and sustainable venture.
• Small—to medium-sized businesses and high-income charities often lack in-house cybersecurity expertise, making them prime targets for cybercriminals. A cybersecurity business can offer invaluable services that protect these organisations from potentially catastrophic breaches by focusing on these markets.
• Beyond the financial and operational benefits, running a cybersecurity business carries an ethical responsibility. By helping to safeguard sensitive data and protect online communities, your company contributes to a safer digital environment. This moral dimension adds value to your services and strengthens your reputation as a trustworthy provider.

The best registration format for your cybersecurity business is a UK limited company structure. Your business will deal with high-value clients, and an LTD provides the framework for professionalism. Furthermore, an LTD and a professional indemnity cover will protect you from personal liability and business obligations. You could also consider working with an LLP, allowing you to pair your skills with a strategic business partner.

Documents required to register a cyber security company in the UK include —

• For a limited liability company, you require an article and memorandum of association indicating a preferred company name, director and PSC details and the registered office and director addresses.
• Form LL IN01 for registering an LLP, through which you will provide the partner and PSC details and registered office address.  

The UK Information Commissioner’s Office (ICO) can impose fines of up to £17.5 million or 4% of your annual global turnover—whichever is greater—for non-compliance with GDPR. However, the risks extend beyond regulatory breaches. Companies that fail to implement robust cybersecurity measures also face severe financial penalties, mainly when these failures result in privacy breaches compromising client data.

A GDPR/ data privacy firm helps businesses avoid such hefty fines by advising them on privacy issues and data security concerns. 

• Much like a cybersecurity business, a GDPR/Privacy Consulting Firm provides critical services that every company, regardless of industry, needs to avoid severe penalties and risks associated with non-compliance. These services are essential in any economic climate, as businesses must continuously adhere to privacy regulations, making this type of firm a stable and resilient business with consistent demand.
• As an emerging and constantly evolving field, there is a significant demand for knowledgeable privacy consultants. Brands need experts who can navigate the complexities of data protection laws, making this a lucrative area for those with the right skills and qualifications.
• GDPR and privacy consulting typically involve ongoing support and training rather than one-time engagements. Once a business secures a client, effective marketing and customer retention strategies can significantly enhance that client's lifetime value, leading to increased revenue and sustained business growth.

Starting a GDPR/Privacy Consulting Firm is an exciting opportunity to make a real impact in a growing field. To get started, simply set up a company limited by shares, which offers the benefit of limiting your liability to the amount of your investment.

Building strong networks and engaging with potential clients is crucial to your success in this professional area. Focus on establishing yourself as a subject matter expert and thought leader. Look for opportunities to speak at industry events or contribute articles to high-value publications. This will enhance your credibility and help you connect with potential clients seeking trusted expertise in GDPR and privacy compliance.

Working From Home Businesses to Start

There’s nothing quite like the comfort and flexibility of working from home. With 16% of employees worldwide working exclusively remotely and 44% embracing a hybrid model, it's clear that flexible work arrangements are here to stay. This section highlights easy entry home business ideas you can start right from the comfort of your home.

Over 4,500 VA jobs are open worldwide on LinkedIn, with new positions being added daily. With the rise of remote work, virtual assistant services are on the rise, and the market is expected to expand even further in the coming months. 

Businesses seek to work with VA service providers due to their flexibility. Depending on the market, they can dial up or down the time allocated to the VA, from simple tasks like email and calendar management to more complex tasks such as content creation and social media marketing.

• 45% of UK businesses hired a virtual assistant. The opportunity to access cost effective local and offshore talent makes human virtual assistants a desirable option for businesses. 
• Starting a virtual assistant (VA) business from home is affordable, with minimal upfront expenses. Additionally, if you're working from home because your employer doesn’t provide an office, you may be eligible for tax relief, further reducing your operational costs.
• An abundance of online resources are available to help you build and enhance the value you offer to clients. Major companies like Google and HubSpot offer free courses that can give you a competitive edge and improve your skills, making you more attractive to potential clients.
• The demand for highly skilled and results-oriented virtual assistants is on the rise. Businesses are constantly looking for efficient solutions to their problems, and VAs play a crucial role in helping them achieve their goals while reducing overhead costs.
• VA services are beautiful to small business owners because they help save on costs. By outsourcing tasks to VAs, businesses can avoid the expenses of hiring full-time staff, making VA services a highly sought-after solution.

Starting a Virtual Assistant (VA) business is straightforward and highly flexible. You can opt to operate as a sole trader, which eliminates the need to register with Companies House and simplifies the setup process. To get started, you can set up an online profile on platforms like Fiverr, Upwork, and LinkedIn or even set up your own website to begin attracting clients.

While the administrative burden is minimal, you will need to file a self-assessment tax return with HMRC. Operating as a sole trader is ideal for a VA business due to its low-risk nature, allowing you to concentrate on growing your client base and honing your skills without the complexities of extensive paperwork or personal liability concerns.

See also: Register Your Company and Get a Certificate of Incorporation.

With over 90% of B2B and B2C sales processes beginning with an online search, the demand for digital marketing services has never been higher. As more businesses embrace the digital space with online stores to sell their products and services, the need for skilled digital marketing agencies and freelancers continues to grow. Whether it's social media management, SEO, or comprehensive digital marketing strategies, professionals in this field are in high demand, making it a lucrative and rapidly expanding industry.

• In today’s competitive landscape, businesses are constantly vying for top Google rankings and innovative ways to engage their customers. This creates a strong demand for digital marketing professionals who can help companies stand out online.
• As online businesses seek creative strategies to connect with their audience through social media, email marketing, and other digital platforms, the need for skilled digital marketing specialists continues to rise. Your expertise can be crucial in helping businesses build and maintain meaningful connections with their clients.
• A digital marketing business offers exceptional scalability, making it one of the best small business ideas to start. With a wealth of resources and information readily available online, it's easier than ever to get started in this field. As you refine your skills and consistently deliver measurable results, you'll naturally attract new clients and have the opportunity to expand your services. This inherent growth potential allows your business to evolve alongside your expertise, driving increased success and revenue over time.

Starting as a sole trader is advisable for a digital marketing freelancer, especially in your first year of business. This approach minimises the administrative burden of managing a Limited Company (LTD), enabling you to focus on building your client base and refining your services. As you grow your business and require more formal structures to support that growth, transitioning to an LTD can provide the necessary framework and legal protections to scale your operations effectively.

In the United Kingdom, over 950,000 people currently receive domiciliary care, a number that is expected to rise significantly as the population ages. Despite this growing demand, only around 809,000 professionals are employed in the home care service industry, highlighting a substantial opportunity for those entering this field.

Moreover, the deeply personal and empathetic nature of care services offers a unique advantage: the ability to build a strong reputation quickly. By consistently demonstrating genuine care and compassion for your clients, you can establish a trusted and respected name for yourself and your business, fostering long-term relationships and community trust.

• The need for homecare services is continually growing, driven by an ageing population and increasing preference for in-home care. This creates a steady and reliable demand for providers in this industry.
• With the right business model and a strong commitment to customer-centred values, your homecare business can experience unlimited growth. By focusing on personalised, compassionate care, you can differentiate your services and build a loyal client base.
• Starting a new business as a domiciliary service provider offers a unique opportunity to show compassion and make a tangible difference in the lives of individuals and families. Your work not only provides essential care but also adds significant value to the well-being and comfort of those you serve.

While you have the option to start as a sole trader or partnership, it's advisable to establish your business as a Limited Liability Company (LTD). This structure helps protect your personal assets by limiting your liability to the business. Additionally, it's crucial to register with the Care Quality Commission (CQC) specific to your region—whether in England, Scotland, or Wales—to ensure compliance with regulatory standards and to legally operate your domiciliary care business.

B2B Small Business Ideas

Two great business ideas are particularly impactful when it comes to helping other businesses succeed. First, market research firms play a crucial role in guiding entrepreneurs by assessing the feasibility of their concepts and staying attuned to evolving customer preferences. Second, HR-focused companies provide essential support in managing talent, ensuring businesses can attract, retain, and develop the people they need to thrive. These services are vital for the long-term success and growth of any business.

Do you have a talent for qualitative and quantitative research methods? Are you eager to apply your skills meaningfully? Market research is essential for businesses looking to enter new markets and established companies striving to keep pace with ever-changing consumer trends and preferences. A successful UK market research firm plays a vital role in helping businesses capture and maintain their industry positions, whether as market leaders or competitive challengers.

• By offering insights into growth matrices and market trends, you can local businesses identify new markets and expand their reach. This makes your services highly valuable to companies looking to scale and capture new opportunities.
• Running a market research company sharpens your analytical skills and enhances your ability to make informed decisions. These skills are transferable and beneficial across all areas of business and personal life.
• As a market research expert, you are constantly attuned to the latest market trends and shifts, making you an invaluable asset to your clients. This deep market knowledge allows you to offer complementary services such as:some text
  • Guide businesses in developing new products that meet emerging customer needs.
  • Help companies assess potential risks and devise strategies to mitigate them.
  • Your ability to foresee market changes allows you to advise clients on adapting proactively, ensuring they stay ahead of the competition.

By leveraging these advantages, your market research company can become a critical partner for businesses aiming to thrive in a rapidly changing environment.

Starting a market research company is a straightforward process. Begin by registering a company limited by shares, which provides a flexible and protective business structure. Generally, additional licenses are required only by your official registration if you plan to operate in specialised sectors such as pharmaceuticals. In that case, you must ensure that your market research materials comply with industry-specific regulations, such as having them reviewed by qualified personnel under the guidelines of the Association of the British Pharmaceutical Industry (ABPI).

The HR landscape is rapidly evolving, shaped by the rise of artificial intelligence and a shifting focus towards efficiency over creativity and quality. In this dynamic environment, the role of corporate wellness programs is becoming increasingly crucial.

A staggering 91% of UK companies report difficulties filling job roles and retaining talent, while 64% of small businesses face similar challenges in retaining skilled staff. As companies grapple with these issues, they often become frustrated by the constant cycle of hiring, training, and losing employees to better offers.

By integrating corporate wellness programs into your recruitment and staffing agency, you can provide a comprehensive solution to these challenges. These programs help attract top talent and enhance employee well-being and loyalty, reducing turnover rates and driving long-term success for your clients in a market where talent retention is vital; offering such holistic services positions your agency as a critical partner in fostering a thriving workforce. 

• Running a staffing agency allows you to make a meaningful impact by helping businesses find the right talent while enabling individuals to fulfil their potential. You play a crucial role in connecting people with opportunities that align with their skills and aspirations.
• The ongoing need for staffing solutions ensures your business remains in demand. Whether the economy is booming or facing challenges, companies will always require skilled professionals to fill positions, making your services essential and resilient.
• You can hit the ground running as soon as you set up your agency, especially if you have a strong network. Even without an established network, you can leverage job boards and collaborate with companies seeking to fill positions. There's always someone looking to hire, providing immediate business opportunities and the flexibility to scale as you grow.

How to Start a Recruitment Business 

Registering your business as a private limited company provides you with legal protection and a professional framework. Once registered, you'll be ready to start building your client base and placing candidates.

Certificate of Incorporation Defined

A Certificate of Incorporation proves that your company has been officially registered at Companies House under the Companies Act and is recognised as a legal entity in the UK. It signifies that your business is now separate and distinct from its shareholders and directors, operating independently under the law.

Who needs a certificate of incorporation UK?

A certificate of Incorporation is essential for various entities and individuals registering a company in the UK. Here's a breakdown of who needs one:

• Entrepreneurs registering a limited company by shares — Whether establishing a public or private company, entrepreneurs seeking to set up a business structure where ownership is divided into shares require a registration certificate. 
• Individuals establishing charitable organisations — Individuals or groups intending to establish charitable organisations with limited liability protection in the UK that operate under a company limited by guarantee structure also require a certificate. 
• Partners Forming Limited Liability Partnerships (LLPs) or Limited Partnerships (LPs)—Partners seeking to enjoy limited liability protection can opt to form LLPs or LPs. In both cases, obtaining a certificate of incorporation is necessary to formalise the registration process and establish the legal entity's existence.

The certificate is official proof of the company's legal incorporation and is essential for conducting business activities and fulfilling legal requirements.

See also: What does limited liability mean?

Which company details are found in a certificate of incorporation?

Once Companies House has approved your registration application, you will find the following details in an incorporation certificate.

1. The type of company such as a private or public company, LLP or another legal entity structure.
2. The registration number uniquely identifies the company and depends on the entity type. For example, a partnership will have a partnership number, while a private limited company will have a company registration number (CRN).
3. The certificate indicates the official date of incorporation or registration.
4. The full legal name under which the company is registered is provided in the certificate.
5. Registrar information may be from Companies House in England and Wales, Companies House Scotland, or Companies House Northern Ireland.
6. Depending on the jurisdiction, formation jurisdiction may be Cardiff, Edinburgh, or Belfast.
7. Relevant legislation or laws under which the company is formed provide the legal context for its establishment, e.g., the Companies Act (2006) or the Limited Liability Partnership Act (2000)

Company Name Requirements for a New Company in the UK

When registering a new company in the UK, the name displayed on your certificate of incorporation must adhere to specific criteria set by Companies House. To ensure approval, your company name must meet the following requirements:

1. Uniqueness — The proposed name must not closely resemble an existing company name, helping to avoid confusion among consumers and stakeholders.
2. Exclude official terms — Avoid incorporating terms like "Royal" or "Government" to imply an association with any local or national UK government agency, as these terms require official authorisation.
3. Avoid sensitive words — Exercise caution when using sensitive words like "Chartered" or "Accredited," ensuring proper authorisation is obtained before inclusion.
4. Appropriateness—The name should be appropriate and not offensive, inappropriate, or likely to cause harm, maintaining professionalism and respectability.
5. Compliance with legal standards — Ensure the name does not suggest criminal activities contrary to the public interest, adhering to legal standards and ethical principles.

How to Register Your Company With Companies House

Here is what you need to form your company directly with Companies House:

• Company name — Choose an appropriate name for your company. Ensure it's unique and complies with Companies House regulations.
• Officer details — Provide information about the company directors and persons with significant control (PSCs), including their names, addresses, and other relevant particulars.
• A registered office address — The official address for receiving statutory mail. 
• Memorandum and articles of association—Outline the subscribers' initial commitment to establish a company and rules for internal management, respectively.  ‍
• Correspondence address for the officers — For receiving statutory letters and legal notices relevant to their role.‍
• Share structure — Determine your company's share structure, including the number of shares and their respective values.‍
• Standard industrial classification (SIC) code — Identify the appropriate SIC code that best describes your company's primary activities.

Once you have these details ready, you can initiate the registration process. The cost for setting up a limited company directly with Companies House is £12, and the process typically takes around 12 hours to complete.

To begin your company formation journey, visit the following link:

https://www.gov.uk/limited-company-formation/register-your-company

Here's how you can take advantage of our free company formation offer:

• Obtain privacy addresses – Protect your company officials, including directors, persons with significant control, and shareholders. Maintain confidentiality and protect personal information.
• Invest in virtual office packages — Our comprehensive virtual office package is designed to provide a professional business address, mail handling services, and more.
• Choose resident or non-resident formation packages — Choose from our range of resident or non-resident formation packages, which include complimentary UK company setup addresses and secretarial services.

With Your Virtual Office London, you can streamline the company formation process and focus on driving your business forward. Experience hassle-free registrations and comprehensive support every step of the way.

Further insights on incorporating a company: Register & Thrive: UK Company Formation Made Simple

How to Get Another Certificate if You Lose One

Always keep your certificate of registration in a safe and easily accessible place so you can quickly produce it when needed. 

However, if you lose your original certificate of incorporation. You can get a copy of the certificate online since Companies House service provides free access to company details and filings through the following steps:

1. Visit the Find and Update company information service at https://find-and-update.company-information.service.gov.uk/ 
2. Enter your company number or name in the search box.
3. Select your company from the list.
4. Click on "Filing history."
5. Scroll down and choose "View PDF" next to Incorporation (you may need to navigate to older pages).
6. Download a PDF copy of your certificate.

You can obtain a certified copy of your certificate of incorporation by calling Companies House on 0303 1234 500 and providing the company's CRN. The standard service costs £15.00, while the same-day service costs £50.00. Digital copies can also be requested via email.

How to Get a Certificate of Incorporation Via Companies House Directly

Companies House sends a company’s certificate of incorporation to the company in the following ways:

• By post — You’ll be sent a certificate of incorporation through the post to the company's registered office address as Companies House approves your application.
• Digital certificate —You can also download a digital copy of your certificate from the Companies House website by searching for a company and accessing its filing history.‍
• Ordering a certified copy—If a company has misplaced its original certificate, it can order a ‘printed certificate of incorporation’ from the Companies House by calling its contact centre. The standard service cost is £15, and the certified copy is delivered within 4 working days.

In summary, Companies House primarily delivers the certificate of incorporation by sending the original printed version to the company's registered office through the post. Companies can also obtain digital or certified copies of the certificate as needed.

How to Get a New Certificate if You Change Your Company Name

After your company is incorporated, tell Companies House when you want to change its name. You'll be issued a Certificate of Incorporation on Change of Name via email, reflecting the new company name while retaining all other details, such as the company registration number and incorporation date, identical to those on the original certificate.

What is a Company Authentication Code / WebFiling Authentication Code?

The authentication code is a six-digit alphanumeric code issued by Companies House to limited companies. It serves as a company’s official digital signature and indicates authorisation to file online on behalf of a business.

Businesses use it to file on the following Companies House platforms —

• Companies House using WebFiling
• Find and update company information
• third-party software by a company formation agent

How do you get an authentication code sent to your company's registered office address?

To get your code, register for WebFiling and follow the steps below.

• Sign in to WebFiling.
• Select either 'Your companies' or 'File for a company'.
• Enter the company number and select where the company was registered.
• Select 'Help with authentication code', then 'I do not have an authentication code'.

Companies House will post to your company’s registered office and take about 5 working days to arrive. For privacy and security reasons, Companies House will not send your code to an email ID or tell it to you over the phone.

However, if you incorporated your company through a formation agent, you’ll most likely have the code immediately after incorporation through their online client account.

How do you request an authentication code from Companies House to be sent to a director’s home address?

In response to the impact of COVID-19, Companies House set up a service that allowed company directors to request authentication codes to be sent to their home address instead of the registered office.

To use the service, all you have to provide is —

• the company number
• to sign in to or create a Companies House account, which is different from a WebFiling account

You cannot use this service if the company:

• has filed a document online in the last 30 days
• is not based in the UK
• is not a limited company or limited liability partnership (LLP)
• is dissolved

It takes around 5 working days for an officer to receive an authentication code at their home address.

How to use your code to file online using the webfiling service

You need your Companies House authentication code for all electronic filings through the WebFiling service, including —

• Notice of change of company name
• Change of company details, including confirmation statements and return of allotment of shares
• Appoint a new director or company secretary, or termination.
• Change of registered office and SAIL address
• Annual account filings include changes in accounting reference dates and dormant accounts.

To file, change, or update your company information online, you'll need your:

• email address
• password
• company registration number
• authentication code

It's faster and cheaper to file online since paper form filing fees are higher, and it can take weeks before you get an acknowledgement that a document has been received and approved. However, the online filing process has built-in checks to decrease errors and associated rejections.

You’ll need the code for any of the following official electronic filing channels —

• Companies House WebFiling
• Find and update company information
• third-party software filing service courtesy of an accountant or the agent who formed your company.

To use third-party software, you’ll need to set up an online filing account to get a presenter ID and presenter authentication code.

See also: How to File a Confirmation Statement With Companies House.

How to change your code

You can change the company authentication code as many times as needed to something more memorable but not obvious.

If you suspect an authorised person might know the code or if your company management structure has changed, follow the steps below.

Please note the change will take effect immediately. Therefore, it is important to notify anyone who files on your behalf.

How to cancel your code

To cancel your code, log in to the web filing service and follow the steps to change the code. Once you get to step 6, click to tick the box "I wish to cancel the company authentication code."

As soon as you cancel the authentication code, you can no longer file documents electronically with Companies House. You will have to submit paper filings instead.

If you wish to resume electronic filing, you will need to request a new authentication code from Companies House, which will be sent to your company's registered office address.

What to do when you have lost your company authentication code

If you find yourself in the situation of having lost your company authentication code, follow these steps to request a new one:

• Sign in to WebFiling.
• Select either 'Your companies' or 'File for a company'.
• Enter the company number and select where the company was registered.
• Select 'Help with authentication code', then 'I do not have an authentication code'.

It's important to note that if you previously had an authentication code, Companies House will send you a reminder rather than issuing a new code.

How to protect your authentication code and company details

To protect your company authentication code and other company’s details, it is essential you do not disclose it to any unauthorised person. Consider the following tips for enhancing the overall security of your company.

• Keep people on a need—to—know basis—Access to your company's sensitive information, including the authentication code, should be on a need-to-know basis. If you are working with an agent, ensure they also have a strict disclosure policy governing how they’ll handle your code. 
• Do not disclose your code through unsecured channels. Avoid responding to telephone or email requests for your code from unauthorised persons. There are reported cases of fraudsters posing as Companies House and requesting the code through the phone or email. Ignore such requests. 
• ‍Change it regularly — Over time, your company’s authentication code may become vulnerable due to breaches or leaks. Therefore, it is essential to maintain a consistent schedule of changing the code to reduce the risk of unauthorised access.

What is Companies House Webfiling

Webfiling service is a free online portal that enables business owners to submit statutory documents directly to the government in compliance with their filing requirements.  

You can use it to file the following documents (GOV.UK links) —

With the multiple filing requirements, the advantage of using the online platform is that it's quicker than filing out paper forms. Submitting is instant, and built-in checks help users avoid errors and rejection.

How do I create my Company Webfiling Account?

To create your Companies House online profile, follow these steps —

How do I use the Company Authentication Code for Online Filing and Update Company Details?

The authentication code is a 6-digit alphanumeric code issued to each company. The code is used to file information online and is the equivalent of a company officer’s signature.

You’ll need an authentication code to file your information online via webfiling or a third-party software.

See also: Companies House Company Authentication Code for Webfiling

How to get your company authentication code

To request your code, create an account or sign in to Companies House WebFiling and follow the instructions. Your code will be sent by post to your company’s registered office - it can take up to 5 days to arrive. If your company already has a code, they’ll send you a reminder.

How to use the WebFiling and Protected Online Filing (PROOF) Service

PROOF is a free service designed to protect your company from unauthorised changes by preventing the filing of certain paper forms changing the following details —

• changes to your registered address
• changes to your officers (appointments, resignations, or personal information)
• changes to your company name by special resolution

According to Companies House, there are about 50 to 100 cases of corporate identity fraud every month, which include fraudsters hijacking companies by changing the details of their directors and registered offices.

How to Sign Up for Email Reminders for key filing deadlines

The Companies House e-mail reminder service sends you alerts whenever your company's annual accounts and confirmation statements are due. 

As you subscribe for the alerts you can — 

• choose up to 4 people to receive a notification (including an accountant, formations, or company secretarial agent)
• file your document immediately from a link within the alert
• receive reminders more conveniently
• avoid late filing penalties by filing your accounts on time
• use less paper, contributing to saving the environment

To set up, follow the steps below 

1. sign into your online service account: https://idam-ui.company-information.service.gov.uk/ 
2. Select ‘Activate e reminders’ from your company overview screen.
3. Select ‘Add an e mail address’.
4.  Enter your e mail address (a maximum of 4 for each company).
5.  Follow the link in the email from Companies House to validate your e mail address.

How to File Your Company's Confirmation Statement and Other Forms or Documents

Your statement must be submitted to Companies House within 14 days of your due date.

Once you’ve logged into your online filing account, click on the “file confirmation statement” on your company overview screen. 

On the screen that loads up next, you can change the date of your next statement and report if your company has admitted to trading on a market. 

Click on “next” after you’ve made the necessary adjustments. On this page, you can now verify that the information Companies House holds about your business is correct and up to date.  

See also: How to File a Confirmation Statement With Companies House

How to Use the Find and Update Service for Company Filings

In addition to the Web Filing, you can also use the Find and Update Company Information Service accessible through https://find-and-update.company-information.service.gov.uk/

As the name suggests, it is a portal for finding information and uploading certain information to the Companies House register.

Using the platform, you can search for a company by name, registration number, or officer. By selecting the link to a company of interest, you should be able to access information such as 

• the registered address
• current and resigned officers
• date of incorporation

You’ll also be able to view the filing history and download accounts and confirmation statements if available.

Once you surface a company name, you’ll get the option for filing for that particular company. To access your Find and Update Company Information account, you cannot use your webfiling credentials. Instead, you must sign in with a Companies House email ID and password. 

To sign up, you’ll need to register with an e mail address, where an activation mail will be sent.

A limited company can only file abridged or full accounts and a change to a registered office using the find and update company information service. There are plans to add filings for — 

• other types of accounts
• confirmation statements
• officer appointments
• changes to the company details

What Is a Company Registration Number (CRN)

A company registration number comprises 8 numbers or 2 letters followed by 6 digits. It is issued by Companies House to identify limited companies in the UK. 

Sometimes, it may also be referred to as a company number, Companies House number, incorporation number, or business registration number. 

What Is the Format of a Company Registration Number

A CRN can take several forms depending on the jurisdiction of your company formation or the type of company you incorporate. See the table below for details.

Table notes: *While the Northern Ireland Limited Liability Partnerships prefix is NILLP, when a user signs into webfiling, only the prefix NC, not NILLP, is required and displayed. Some older Northern Irish companies have CRNs with the letter ‘R’ followed by 7 digits, but these numbers are no longer issued.

How to Find Your Company Registration Number?

One of the main places to find the number is on your incorporation certificate from Companies House.

Other places you can locate your CRN number include —

• Official correspondence with Companies House or HMRC.
• Visit Companies House - GOV.UK register and search for a company by name, the result will show the CRN.
• If you’ve changed your company name recently, you can locate the CRN in the change of company name certificate.
• Review emails or correspondence from your company formation agent or accountant. They may regularly cite your incorporation number in their communication.

Your CRN Is Different From Other Numbers

Your Company Registration Number (CRN) serves as a unique identifier for your company within government records. However, it's crucial to distinguish it from other numbers used by various agencies. Below is a breakdown to clarify.

How Companies House Uses Your CRN for Webfiling

Companies House requires that you provide your CRN WebFiling to enable them to identify and distinguish your company from the other registered entities. 

The unique number ensures that any filings or submissions you make through WebFiling are associated with the correct company record in the database.

Read also: How to File Company Information Online Using the Companies House Webfiling Service.

At What Point Will You Need a Company Registration Number? 

CRNs are required for any activity that requires signing in to the online filing system and make changes to your company records through either WebFiling or the Companies House account. 

Such filings and amendments include — 

• Making your Companies House filings including – 
  • Submitting annual returns
  • Filing your accounts
  • Filing copies of resolutions
• Amending company information with the registrar such as –
  • Company name change applications
  • Changing your registered office address and Single Alternative Inspection Location (SAIL) address
  • Your Accounting Reference Rate (ARD)
• Adjusting your company structure, or company officer details which may include — 
  • Adding a new company secretary or secretary
  • Removing an existing company director or secretary
  • Changing the details of directors and secretaries
  • Increasing capital of shares
  • Issuing share certificates.
• In your tax-related dealings with HMRC in the following cases for example — 
  • Registering for VAT
  • Paying your Corporation Tax, VAT, or income tax. 
  • Filing Company Tax Returns
  • Issuing dividend vouchers
  • Making national insurance contributions through PAYE

You’ll also need your CRN for official purposes such as opening a business bank account, signing contracts on behalf of your company, and applying for funding or tenders. 

Where do I need to display my Company Registration Number?

You are legally expected to display your limited company’s registration number on all your company stationery, including but not limited to —

• Letterheads
• Emails
• Invoices
• Receipts
• Online content
• Order forms

How to Register for a Company Registration Number

Your CRN will be provided by Companies House upon registration. There is no separate registration process to get a company number. As soon as your new limited company or Limited Liability Partnership (LLP) is registered, the number will be referenced in your digital certificate if you registered online or a paper certificate by post if you set up a limited company using a paper application. 

Will I get a new CRN number if I change my business name?

No. Your CRN will not change when you change your business name. 

It remains the same for the life of your company since it's the main way Companies House uses to identify your business regardless of any changes in name, address, directors, shareholders, or business activities.

Instead, you’ll simply receive a ‘certificate of incorporation on change of name’ from Companies House, which will contain the new name, date of change, and the same CRN number. 

Please note that the change of name certificate does not replace the original certificate of incorporation.  

Is a company registration number the same as a tax number?

No. CRNs are issued by Companies House as unique identifiers for individual companies on the register, whereas company tax numbers are unique 10-digit codes that HMRC assigns to companies to track tax records.

Just like with CRN, you do not have to apply for your UTR number, HMRC will automatically give you one as soon as your company is registered with Companies House. 

Do sole traders and ordinary partnerships get company registration numbers?

No. CRNs are only issued to limited companies and LLPs, including companies limited by guarantee because they are incorporated or registered at Companies House and are required to file statutory records.

A company limited by guarantee is a type of limited company in the UK registered to advance the objectives of non-profits such as clubs, charities, societies or any other institution seeking to function under the protection of limited liability.

See also: What does limited liability mean?

Company Limited by Guarantee

As stated, a private company limited by guarantee is registered with Companies House, the official registrar of companies. Unlike a private limited company (ltd), the company does not have shareholders or a framework for raising funds through share capital. However, it has guarantors whose liability is limited to the value of the nominal guarantee they pledge. 

Formation Requirements

• Company name, subject to the same rules as one limited by shares.  
• Director and guarantor details, including name, date of birth, nationality, residential address, and service address. Guarantors can be individuals or a corporate body with perpetual succession. 
• Governing documents, which include articles and memo of association. 
• Details of persons with significant control (PSCs), including full name, date of birth, nationality, residential address, service address, nature of control, and three security details for online signature.
• A registered office address.
• Bank details.
• A service address for the initial subscribers, which will appear in the company public register.‍
• Standard Industrial Classification (SIC) code that describes the business activity.

Read also: Director Service Address vs Registered Office Address 

Key Features 

• The company is a legal person separate from its owners.
• Offers limited liability protection, restricting the liability of the members to the value of the guarantee provided at the point of formation. 
• Incorporated and regulated by the Registrar, subject to the Companies Acts. 

Company Structure

A company limited by guarantee works through the following structure — 

• Directors (at least one) — Like a Ltd, members must appoint directors to manage its day-to-day operations. 
• Committee and powers — Directors can delegate certain responsibilities to sub-committees. 
• At least one guarantor — Similar to shareholders, they guarantee to pay a certain sum in case of insolvency. 
• Meetings and voting — The members can attend meetings, vote, appoint, and remove directors. 
• Company secretary — The CLG may opt to appoint a company secretary who helps the director oversee that the company complies with all statutory requirements. 
• A service address for the initial subscribers appears in the company public register.
•  Standard Industrial Classification (SIC) code that describes the business activity.

Filing Requirements

The CLG must file the following documents with the company’s Registrar — 

• Annual confirmation statements 
• Annual accounts
• Report company changes 
• Accounts and company tax returns for HMRC
• VAT Returns, PAYE reports, and Self Assessment tax returns (as relevant)

The company must also maintain a register of members and a register of Persons With Significant Control. 

Suitability 

A company limited by guarantee is suitable for membership ventures seeking to pursue non-profit objectives for the benefit of the members under limited liability protection.

Company Limited by Guarantee Charity

Depending on the registration process, two main types of charity companies are limited by guarantee. These are —

• A charity company is a CLG registered with the Registrar and the Commission. 
• Charitable incorporated organisation (CIO), a CLG registered only with the Commission.

Formation Requirements (Charity Company)

On the side of Companies House registration, the following are the requirements for registering a charity company.

• To register, it is essential to ensure the charity name is available by searching both the company and charity register. 
• The directors of the CLG automatically become the trustees of the charity company, and new trustees can also be appointed to add to the number. 
• Objectives must pass the public benefit test. 
• Governing Documents, including the articles and memorandum of association.
• Registered office address and bank details.

Key Features

• The company is a separate legal entity from the trustees and guarantors
• Liability is limited to the value of charity assets 
• A charity is answerable to both the Registrar of Companies and the Commission.

Structure 

It works through the following structure — 

• Trustees who are responsible for running the entity. 
• Guarantors are members of a company limited by guarantee continue to support the objectives of the venture. 
• PSCs or beneficial owners who exercise control over the company.

Filing Requirements

The CLG must file the following documents with the company’s registrar — 

• Annual confirmation statements 
• Annual accounts
• Report company changes 
• Accounts and company tax returns for HMRC
• VAT Returns, PAYE reports, and Self Assessment tax returns (as relevant)

The company must also maintain a register of members and a register of Persons With Significant Control. 

Read also: Your HMRC UTR Number Explained

Suitability

A charity company is suitable for individuals or entities seeking to implement projects or programs that benefit the public or a target population.

Difference between a Private Company Limited by Shares and a Company Limited by Guarantee

One of the key differences between a private LTD and a guarantee company is how the two legal structures treat profits. In a limited company, shareholders can opt to distribute profits to its members as dividends or reinvest them back into the company. 

But, a company limited by guarantee is by nature a not-for-profit entity and the guarantors can only reinvest profits back into the business to finance their objectives but not withdraw as profits.

Yet, with the above differences, the two structures have the following similarities — 

• Offer limited liability protection to the owners in case of insolvency. They will only be responsible for paying company debts up to the value of shares or guarantee.
• Registered and some of their pertinent details such as registered address, director information, shareholder and guarantor details, and filings are available in the companies register for public scrutiny. 
• Are required to have one director, secretary (for public limited companies though optional for ltds and CLGs) and members (who act as shareholders and guarantors.)
• Established by a memorandum of association, signed by all the initial subscribers agreeing to start the business, and the articles outlining rights, responsibilities, and how the business will manage its operations. 
• Require registered office address, director service address, and company name found to be available by searching the register.
• Have similar routes for dissolution, which can either be by voluntary strike-off, Members' Voluntary Liquidation (MVL) (for solvent companies), Creditors' Voluntary Liquidation (CVL) and compulsory Liquidation (for insolvent businesses).  

For the most part, the same rules and regulations apply to companies limited by guarantee as to companies with a share capital.

See also: The Difference Between a Voluntary and Compulsory Strike Off

What is the process of forming a company limited by Guarantee?

Registering a company limited by guarantee requires the following — 

• A company name: Use the uk company public register of companies to find the available and suitable name for your venture. 
• Registered office and director service address for directors, shareholders and guarantors. 
• Determine your SIC code aligned to the intended activities of your venture
• A limited company by guarantee must have at least one director and guarantor. 
• Statement of guarantee indicating the circumstances during which each subscriber will pay the typically £1 nominal guarantee amount. 

Can guarantors take a share of the profits?

No. Guarantors cannot take out a share of profits because the business structure is designed for non-profit ventures. In case there is surplus income, the entity is expected to reinvest the surplus back into the business. If the members ever decide to take out profits, the company will no longer be considered non-profit and will not be able to apply for charity status. 

What is the difference between a shareholder and a guarantor?

What sets apart a shareholder from a guarantor is their role and expectations within different types of companies. Shareholders are associated with limited companies, whereas guarantors are found in companies limited by guarantee.

Shareholders hold ownership in LTDs and anticipate receiving dividends as returns on their investments. They have a stake in the profits and losses of the company based on the number of shares they hold.

On the flip side, guarantors are connected to companies limited by guarantee. Guarantors are not typically interested in profit-sharing or dividend distributions like shareholders; instead, they serve as a financial backup in case of financial difficulties for the company.

Why set up a limited company by guarantee?

Some of the reasons why members may opt to set up as a CLG include — 

• Personal liability protection — By forming a CLG, the liability of the company’s members is limited to the amount they agree to guarantee in the event of insolvency, protecting personal assets from being used to settle company obligations.
• To pursue objectives that benefit society — The enterprise is able to operate as a legal unit while focusing on its core objectives without the pressure of maximizing profits for shareholders.
• Credibility — Being registered as a limited company can enhance the credibility and reputation of the organisation. It signifies a formal and transparent structure, which can be appealing to stakeholders, donors, and partners.
• Perpetual succession — It offers perpetual succession, meaning it can continue its existence regardless of changes in membership, a feature crucial for organizations with long-term goals and commitments.

Can a Company Limited by Guarantee Lose Its Charitable Status?

Technically, a CLG does not have charitable status, since it's only acquired after the non-profit is incorporated by the Charity Commission and transforms into a charity company. However, it may lose its right to incorporate into a charity if — 

• Members take out surplus profits as personal income;
• If profits are distributed to members as a form of dividend payment.

If the company has already incorporated into a charity, it will lose its status if it takes any of the above actions or fails to — 

• Adhere to its governing documents particularly pursuing its objectives.
• Comply with regulatory requirements such as filing confirmation statements and reports to the commission or the registrar of companies. 

Can guarantors take a share as evidence of ownership?

No. A company limited by guarantee must not and cannot issue shares. The guarantors' evidence of ownership is found in the statement of guarantee, where they pledge to provide a nominal amount in case of insolvency. 

The company’s memorandum of association that lists the subscriber agreement to form the venture also serves as proof of ownership. However, there is no stake given in terms of shares. 

Is an article of association relevant to the formation of a not-for-profit company?

Yes, it is a compulsory governing document for uk non-profit company. It documents how the subscribers intend to manage the enterprise. It contains the following information —

• Directors powers, responsibility and scope for decision making;
• Process of obtaining membership and resigning
• Meetings
• Voting procedures
• Administrative arrangements

See also: Memorandum and articles of association 101

Guarantee companies vs companies with share capital

A CLG is like an ordinary private company limited by shares. However, unlike LTDs, a non-profit has no shares or shareholders and reinvests surplus income to enable the company to run its day-to-day activities. Yet, both entities are required by law to file accounts at the Companies Registration Office and submit annual returns. The CLG is set up for certain objects for the benefit of its members while an LTD is established primarily for profit-making purposes and to provide returns to its shareholders.

Can limited by guarantee companies have persons with significant control?

Yes. A CLG can have PSCs who exercise ultimate control over the company. Despite the unique structure of CLGs without shareholders or capital in the traditional sense, individuals within the organization can still qualify as PSCs if they meet the criteria outlined in the Companies Act 2006. 

An individual or company who fulfils one or more of the following conditions qualifies as a PSC - 

• Directly or indirectly holds more than 25% of the voting rights.
• Directly or indirectly holds the right to appoint or remove a majority of directors.
• Otherwise has the right to exercise significant influence and control.

Company name requirements for guarantee companies

CLG naming requirements are the same as the business name requirements for private limited companies. Your CLG name must not — 

• Be too similar or identical to an existing corporation name;
• Imply any connection with the UK government, local authority or any agency;
• Include sensitive words like “Charity” without the appropriate permission;
• Be offensive, inappropriate or likely to cause harm; and
• Suggest criminal activity or be contrary to public interest.

What is the difference between a Charitable Incorporated Organisation (CIO), a Community Interest Company (CIC) and a Company Limited by Guarantee (CLG)?

The main difference between a CIO and a CIC lies in their legal structure and statutory oversight as explained in the table below.

Whether you live in the UK or are a foreigner seeking to do business in the UK without living here, there are various ways to set up a company and make yourself official. Fortunately, you can form a new company in less than one working day. Determine your goals and the appropriate company structure to get started. 

How to Register a Company in the UK (Company Structure and Formation Guide)

There are three basic formats a UK company registration can take – 

Register Your Company Today!

All of them are suitable for different business types, so choosing the right one is the first step towards registering a company.

Register as a Sole Trader

Also known as a sole proprietorship, it is a type of business with one owner. You can trade under your name or use a business name as a sole trader. It is the simplest business structure in the UK and may suit freelancers or other solo entrepreneurs. 

You can register as a sole trader if you’ve earned more than £1,000 from self-employment in the last tax year - (6 April of the last year to 5 April of the current year). Register by 5 October of your second tax year of business.  

To register as a sole trader, enroll for self-assessment and class 2 national insurance through their business tax account if your profits exceed the £6,725 threshold. You’ll need a government gateway ID and password to access the account. 

However, registering for self-assessment is different from registering a sole proprietorship. It allows you to report your income, including self-employment income, to HMRC. 

Set Up a Limited Company In the UK 

In most cases, registering a company requires at least one director and shareholder for the business to become a separate legal entity with distinct rights. You can be a sole company director and shareholder of your own business. You can also add more directors and shareholders in the future if you decide to expand your company.

Compared to other company incorporation UK formats, a limited liability company has more compliance requirements, which come with added benefits, including protecting your personal finances in case the business encounters financial difficulties or fails. If you want to take the hard work out of officially forming your business, consider using our company set-up service and save yourself the extra effort. It is a simple two-step method where you order online, and we contact you for the necessary information to swiftly and securely register your company with Companies House.

Types of UK LTD companies you can form include — 

Limited Liability Partnerships (LLPs)

A limited liability partnership has at least two members (people or a company known as a corporate member) coming together to own and run the business jointly. Even though all the members have equal rights over the business, the law requires that at least two of them be designated as responsible for ensuring compliance with statutory requirements.

The partners must register for self-assessment since the LLP does not pay corporation tax, but each member is taxed on their share of profits as a self-employed individual. However, the members are not liable for debts if the business fails to pay. 

To register, you’ll need an acceptable business name, a registered address in which your principal place of business will be publicly available, two designated members, and an agreement that outlines how the LLP will be run. Once you have the requirements, you can register your LLP with Company House. Leverage Your Virtual Office London LLP registration service for a swift and affordable process.

Set Up a Private Limited Company (Limited By Shares of Guarantee) 

A company must either be limited by guarantee (CLG) or shares (LTD). An ltd is a profit-making business owned by shareholders with certain rights. The corporation is divided into shares, each assigned a nominal value, which reflects the initial face value of the shares, which may or may not align with the actual market value.  

CLG, on the other hand, is for a non-profit, such as a social enterprise, charity, association, or club, owned by members who act as guarantors of the company's liabilities, and each member undertakes to contribute an amount specified in the articles in the event of insolvency or the winding up of the entity. It does not have shares or shareholders.

To set up an LTD company online, you’ll need to choose a name according to Companies House rules. Next, you will need to appoint the company officers, which typically include directors, with the option of appointing a company secretary. You will also be required to give the names of the shareholders, who may also be company directors. Articles and memorandum of association are essential because they document how you intend to run the entity. Lastly, Companies House requires that you register an official address and choose a SIC code that identifies what your company does. 

Setting up a UK CLG requires that you submit the following company documents —

• Check that your preferred company name is available;
• Have at least one guarantor (individual or corporate body) and director;
• A constitution that contains elements of articles and memorandum of association;
• A registered office address in the UK that will be publicly available;
• Names of the persons with significant control;
• Statement of compliance that -
  • Outlines the nominal amount (often a small sum, such as £1) that each subscriber will pay as their guarantee;
  • The statement of guarantee that details the circumstances under which a guarantor will be required to pay their guarantee and
  • A SIC code.

How to Choose Your Company Name

Once you decide to register a new business, use the checklist below to get the name right — 

• Confirm that the name is not too similar or identical to an existing company name.
• Your preferred company name should not suggest any connection to the UK government. Avoid using words such as  “Royal,” “Her Majesty,” or “Crown.”
• The name should not be offensive or inappropriate in any way.
• It should not suggest criminal activity or any undertaking contrary to the interest of the public. 
• Unless you have relevant permission, avoid using words like “Chartered” or “Architects” that are likely to mislead the public as to the nature of your business or credentials. 

Read also: Top 21 Best Small Business Apps to Manage Your Daily Operations

Register Your Company Today!

Contact Your Virtual Office London, UK's top rated company formation agent, if you need to register a new company. We offer a comprehensive set of company formation packages, which include everything you need to get your company up and running.

Other extras included in the package above are — 

• Fast Online Formation
• UTR Number
• Digital Certificate of Incorporation
• Digital Articles of Association
• Digital Share Certificates
• £25 Cashback with Wix
• Bank Referral
• Free .co.uk Domain
• Free Accountant Introduction
• Fully Compliant with AML and KYC Regulations

See also: Your HMRC UTR Number Explained

FAQs

How much money is required to register a UK company with Companies House?

Register a UK company and start your journey right with a bundled package of just £39.99, which includes a UK registered office address, a free .co.uk domain, and an accountant introduction. We provide exceptional value for those keen on commencing their business without additional office space expenses and initial staffing requirements. 

See also: Directors Service Address Vs. Registered Office Address Service

Can anyone register a new company in the UK?

Registering a new company for UK and non-UK residents takes up to 6 hours to form a company. All you need to do is determine the type of company you want to establish, think through an appropriate business name and contact us. We will help you put together all the necessary documents you need to set up an LTD. 

How to register a holding company in the UK?

In the UK, the term ‘holding company’ is used to describe a company that holds the shares of other companies. A common way to register a holding company is to incorporate it as an LTD through the following steps:

1. Think through a unique name for you and register it with Companies House. Until 2015, using the word “holding” or “holdings” in a company name was considered sensitive by Companies House, but it is now acceptable.
2. Register an official business address and select an appropriate SIC code. 
3. Appoint directors and a company secretary. You must appoint a director, but you do not have to appoint a company secretary.
4. Identify people with significant control (PSC) over your company—for example, anyone with voting rights or more than 25% of the shares.
5. Prepare a memorandum and articles of association describing the company will run. 
6. Form your company. 

After you’ve set up the holding company, transfer the ownership of your subsidiaries' shares and assets to it.

Can I own a business in the UK as a foreigner or non-UK resident living outside of the UK?

Yes, foreigners and non-residents can open a company in the United Kingdom without needing a VISA. There are no restrictions based on nationality. However, you’ll need to comply with the following legal and administrative requirements before you are cleared to start. 

• Choose a proper business structure that best fits your business goals;
• Register your business with Companies House to a UK address; and
• Get the necessary permits or licenses.

Once your business is registered, please note the following — 

• The corporation registered to a non-resident is liable for UK tax obligations.
• A UK resident director is not a mandatory requirement, but it is recommended for operational convenience.
• While not legally required, having a UK bank account is advisable to enhance business credibility.
• You can use a family or friend's address as your registered office or opt for a central London virtual address for added privacy.

Do I need a business bank account during the company registration process?

No. You do not need to open a business bank account, but you’ll likely find it impossible to operate without one. We understand that most British high-street banks can make it difficult for the new entrepreneur to open an account with company credit checks and multiple other requirements that new businesses cannot fulfil.

However, we’ve carefully selected partners with products suitable for our clients. As you set up your new business with us, we will recommend a few banks to consider. Whether you choose a Barclays Business Account or a Card One Business Account from our curated list, we ensure a seamless process to meet your financial needs.

What are the pros and cons of working with a simple company formation agent?

A company incorporation agent helps new businesses with online company formation and registration services. But with Your Virtual Office London, we go the extra mile and ensure your process is simple, seamless, and affordable. If you choose to form your company limited by share or guarantee with us, take the time to understand your goals, risk tolerance and incentives. With this understanding, Your Virtual Office London will advise you on the most suitable company structure and expedite your process by working with you to submit a company application without error.

There are no downsides to working with us!

What company documents do I need during simple company registration?

To register your company, you’ll need to submit the following documents — 

What documents do I receive after new business registration? 

Once your new limited company is registered, you’ll receive the following documents — 

• Certificate of incorporation, which includes your company number;
• Official memorandum and articles association; and
• Share certificates.