Before incorporating a company, you will have to decide on a business structure that is the most suited to your business.
Private Limited Company
Incorporating a company involves registration with Companies House and administrative aspects such as filing of Annual Return and Annual Accounts. However, trading as a Limited Company has many benefits:
The Limited Liability means your personal assets are being protected. All you are at risk of losing is the money you have invested in the company
Customers sometimes prefer dealing with companies rather than individuals. It provides them with the added reassurance of a long standing, well established business.
Opening a bank account with a limited company’s certificate of incorporation is really straight forward, unless you have encountered financial issues in the past (i.e. declared bankrupt), there should be no reason for a bank to decline your application. Applying for a loan through a Limited Company is also more likely to get approved & make the process easier.
Find out more about Private Limited Companies
This option only requires a phone call to HMRC, whereas incorporating a company involves registration with Companies House and administrative aspects such as filing of annual return and annual accounts. However, you do not get all of the benefits associated with a Limited Company..
Being a Sole Trader give you flexibility and control over your business, but makes you personally liable for any debts you may occur during the running of the business.
Find out more about Sole Trader
Limited Liability Partnership (LLP)
This option will suit those looking to setup a business with a colleague or partner. It combines the Limited Liability protection available to Limited Companies with the tax structure in place for partnerships.
Limited Liability Partnerships are suitable for a minimum of 2 people and are widely used by anyones wishing to form a professional partnership.
Find out more about Limited Liability Partnerships
Public Limited Company (PLC)
The main purpose of a PLC is to have the ability to sell shares to the public through a stock exchange. Many are however setup for the extra financial status. They provide limited financial liability but have strong legal requirements. For example, it has to prove that 25% of the £50,000 worth of shares has been paid up before it can start trading.
Find out more about Public Limited Companies
Once you have chosen the type of company you would like to incorporate, you will need to choose a Company Name and check its availability. Remember that a name is a crucial part of your business and it is therefore essential to spend time to choose it wisely.