Are you planning to incorporate your company in the UK? With its efficient communication system, modern infrastructure, strong governance, and central location, the UK is a top destination for entrepreneurs looking to start or expand their business. Check out the different entities available to identify which suits your business best.
Types of entities available in the UK
The entity you choose will have considerable implications on your liability, the amount of tax you will need to pay, and the amount of work involved to register your business. Companies incorporated outside of the UK but intend to have a physical presence in the UK need to register their business.
You may register as a Sole Trader with the HM Revenue and Customs (HMRC) if you are self-employed and intend on running the business alone.
A business that involves two or more individuals who share the risks, costs, and responsibilities may register as a Partnership. A partnership is considered an unincorporated entity, and its partners are considered self-employed.
Limited Liability Partnerships (LLP)
An LLP operates in the same way as a partnership, but each partner’s liability is limited to the amount of money invested. LLPs can be incorporated with two or more members, and each member can be either an individual or a company. Unlike regular partnerships, LLPs are considered a separate entity and should register at Companies House and HMRC.
- Objective is to make a profit.
- Minimum of two partners must be appointed “designated” members who are responsible for the day to day operations.
- Partners have limited liability based on their share of investment.
- Members pay tax on personal income.
Private Limited Company (LTD)
The private limited company is the most common form of a corporate entity in the UK because of the limited liability, tax advantages, and ease of operation. An LTD is a legal entity and is separate from its owners in the eye of the law. This is a crucial benefit as the liability of the shareholders is limited to their investment.
Once a private limited company is incorporated, its business information will be publicly available on the Companies House records. This offers transparency, which can be an advantage when doing business in the UK.
- Have at least one director over the age of 16.
- Have a registered office in the UK.
- The company name must comply with Government regulations.
- At the time of incorporation, at least one share must be issued.
Public Limited Company (PLC)
A PLC is similar to an LTD wherein the liability of its members is limited to their investment. The advantage is that shares can be publicly traded and used to raise finances. However, it is best suited for large enterprises as a minimum of £50,000 worth of shares must be issued before a company can be registered as a PLC.
If you want to set up a branch in the UK without having to set up a wholly-owned subsidiary, you may opt for setting up a UK Establishment. This is an attractive option for investors who want to dip their feet in the UK without the high regulatory requirements and maintenance costs of setting up a limited company.
UK Establishments have no legal entity distinct from the overseas parent company. Registration with Companies House is required as well as a copy of the certified and translated constitutional documents.
Process of incorporating a company in the UK
There are six steps to incorporating a company in the UK:
- Prepare the constitutional documents such as the Memorandum of Association and the Articles of Association.
- Have a distinctive business name that should end with “Limited or Ltd” for LTCs or “LLP” for limited liability partnerships.
- Must have a registered address in the UK. You can use a PO Box with a physical address and postcode after the PO Box number.
- Identify the company directors and the partner’s responsibilities. There should be at least one ‘general partner’ and one ‘limited partner’ – a partner can be an individual or a company.
- Present the statement of capital, which outlines the company’s share structure and value.
- Have a person with significant control who must be registered on the incorporation of the company. This person exercises control of the company about share ownership, voting rights, and appointment of directors.
Partner with INS Global
Whether you are planning to start or expand your business in the UK, it’s best to work with a trusted partner who has the right expertise and local knowledge. INS Global specializes in company incorporation and offers a comprehensive suite of services, which include PEO in the UK, recruitment, invoicing, and payroll administration. Get in touch with us today, and let us help you simplify your new venture.