Jasmine Birtles
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How to Open a Business in The UK?
Reading Time: 4 minutesOptimal taxation and social guarantees, combined with clearly defined legislative standards, have made the United Kingdom a state that influences the whole world. That is why opening a business in England is very prestigious. If you are thinking about starting a business and the advisability of using a virtual office in London, this article is for you.
- What Do You Need to Know to Register a Company in England?
- LTD
- PLC
- LLP
- What is Important to Know to Open a Company in the UK?
- How to Register a Company in the UK?
What Do You Need to Know to Register a Company in England?
The first thing to start with is to decide what kind of business to open in England. The type of company determines the specifics of registration with tax and other government agencies, reporting methods, the system of labor relations with employees, and more. To make the right choice, we advise you to focus not only on the scope of commercial activity but also on your personal preferences. Due to the optimal choice of the type of company, integration into the country’s business environment will be easy, costs will be minimized, and profit generation will be accelerated.
There are four main types of company organizations in England: limited liability company (LTD), public limited company (PLC), limited liability partnership (LLP), and public limited company (PLC).
LTD
A limited liability company (LTD) is considered a legal entity almost independent of its owners. Responsibility for economic activities and financial support lies with the company, and not with the individuals who founded it. All contracts and agreements are concluded only on behalf of the company. Debt obligations concern the owners only in the amount of share capital, as well as to the extent of their personal guarantees.
This type is the most common and is distinguished by the fact that both the owner and the director can be the same person. A person can have any citizenship and live anywhere. Such business entities may be limited either by shares or by guarantee. Depending on this, they have two varieties.
A company limited by shares is the most popular type of company in England, which allows you to run a profitable business and distribute income yourself. When investing in a business, shareholders receive their ownership shares depending on the size of the contribution. The amount of dividends received is calculated using the same principle.
Limited by guarantee company – usually used to register charities and non-profit organizations. This type of company does not require the presence of shareholders. The company belongs to guarantors, who prefer to use the profits not for their own needs, but to invest in the business.
Both options involve the financial liability of shareholders or guarantors. In the first case – within the nominal value of the shares, in the second – by a guarantee or the amount of funds invested in the company.
PLC
A public limited company or PLC can be owned entirely by individuals. This type of business allows the owner to trade their shares on the stock exchange.
Opening a company of this type in the UK means being prepared to comply with clear conditions. You will have to properly register shareholders and directors, issue share certificates, and hold annual meetings.
The PLC also has certain requirements:
- A minimum of two shareholders, a minimum of two directors, and a qualified company secretary;
- Uniqueness of the name;
- The amount of shares issued is at least £50,000 (at least 25% of which must be paid).
- The owners of such a company bear financial responsibility in an amount not exceeding the value of the shares they own.
LLP
A limited liability partnership (LLP) is a legal entity that is independent of its members and can independently conduct financial and economic activities (own commercial real estate, enter into contracts with other companies. The most common option when opening a company in England is when LLP income tax does not pay at all. All partners report their income separately to the state independently.
The PLC also has certain requirements:
- At least two responsible partners (can be both legal entities and individuals);
- Uniqueness of the name.
If bankruptcy occurs, each member risks losing only the amount they contributed when registering the partnership. In the case where the participants of an LLP (not carrying out commercial activities in the British Isles) are tax residents of another state, they pay taxes not in England, but only in their country of residence. When a partnership buys or sells property, there is no need to pay stamp duty.
What is Important to Know to Open a Company in the UK?
There are a number of general requirements for companies and partnerships in the UK. Along with differences among the main types of companies and partnerships, these conditions apply to absolutely all legal entities and individuals. In addition to the importance of having a virtual office in the UK, it is important to follow the following rules:
- Mandatory payment of corporate tax on all profits that are distributed to shareholders in the form of dividends. The taxes on dividends themselves are paid by shareholders.
- Registration for VAT, as well as for PAYE (the British Inland Revenue system for collecting income tax and social contributions).
- Maintaining the relevance of staff documents and primary accounting reports.
- Timely notification of Companies House about key company events: date of the annual meeting, change of legal address, changes in the composition of owners or directors.
How to Register a Company in the UK?
The registration procedure is quite simple, but it will require pedantic care and special preparation from the future English businessman.
The start is submitting a registration application. This requires information about all founders, directors, and beneficiaries (persons with control over the company). You will also need to choose a unique name for the company. After registration, standard documents will be issued: Charter and Memorandum of Association. If desired and necessary (for example, when it is necessary to take into account special principles of business management or the personal wishes of investors), you can prepare constituent documents based on an individual sample.
The standard time for registration is 5 days. In some cases, the process even takes 24 hours. It depends on how qualified the lawyers are in handling the cases.
Conclusion
London is one of the world’s largest financial centers, providing access to capital, investment, and financial services. Opening a business in this city, with the right approach, will certainly allow you to achieve your goals. We recommend contacting the Hoxton Mix, a reliable provider of virtual office solutions, including virtual offices in London. The company offers several service packages that differ in cost and range of services.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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