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6 Things You Need To Know About Company Formation

Company formation can be a daunting task for anyone who doesn’t know the steps required to form a limited liability company. Once you are familiar with the steps, it can be relatively easy to create your own LLC in the UK. 

When you register a company, it acts like its own entity, which means the company is responsible for its own liabilities, assets, and finances. The owner or shareholders will not be held legally responsible for any liabilities that come with the company. However, LLCs must follow certain accounting practices and reporting requirements. The process of company formation can be easy, but you need to know 6 things to do it right.

  1. Choosing The Company Name

Though it might seem like an obvious step to take, you should consider the company’s name carefully before forming a company. When selecting a name, keep in mind how you can create your brand around it and how customers will perceive your business. The name has

to be relevant to your industry. If you’re unsure whether the name you are considering is available or being used by another business, you can use online tools. This will help you to avoid having to re-submit a new name. The business name should be unique, which means that no other business has the same name. Additionally, the name shouldn’t include any sensitive words. Choose a name that won’t be restrictive when it comes to selecting domain names and trademarks.

  1. Legal Requirements

There are a lot of legal requirements you must be aware of before applying to form a company. Review the documents required for creating an LLC and what steps are needed. The procedures might be complicated or overwhelming for some people, and that’s why it is essential to hire a lawyer to guide you through the process. Specialized lawyers have deeper knowledge and insight about the whole process which can help you navigate the procedures with ease. 

Even after incorporating your company, you will need a lawyer to handle the legal liabilities of the company and to ensure that you will not be held legally responsible for anything regarding your company’s activities. Keep in mind that you can handle all of the legal requirements on your own if you have sufficient knowledge to guide you, but a lawyer will make the whole process easier and faster for you.

  1. A Company Limited by Shares vs. by Guarantee

This is depending solely on how you will operate your business. Businesses that aim to make a profit opt for forming a company limited by shares, while non-profit organizations and charities form a limited company by guarantees. To be incorporated at Companies House, both types of organizations must have one director and one shareholder or guarantor. 

The main difference is that a company limited by shares must have shareholders that have at least one share, while the company limited by guarantee should ensure each guarantor must contribute towards the company’s debts. For companies limited by shares, the shares specify how much of the company they own, how much control they have over the company’s activities, and the amounts of profit they shall receive. 

  1. Documents Required

There are three ways to apply for a company formation. If you use the assistance of company formation agent services, all necessary documents and relevant information is submitted online. Companies House Web Incorporation Service also allows you to submit all paperwork online, but according to company formation specialists at Uniwide Formations, you have to post any additional documents after the initial submission. If you prefer physical paperwork, you should use the services of Companies House postal application to provide the required documents which include:

  • Form IN01
  • Memorandum of association
  • Articles of association
  • Supporting documentation
  1. Company Addresses

You need different addresses to form a company at Companies House. However, some of them are optional, while others are mandatory. Using the Registered Office Address is required for all limited liability companies and acts as the official address for that company. Naturally, it must be within England, Wales, Scotland, or Northern Ireland and it can be either residential or non-residential. 

The Service Address is needed to receive personal statuary mail from UK government agencies. However, the address can be anywhere in the world, not just in the UK. These two addresses are placed on public records. Directors and company secretaries must submit the Usual Residential Address which is placed on public record if it is also registered as a service address, registered office, or a single alternative inspection location address (SAIL). Both the SAIL address and Business address are optional.

  1. Details of Owners, Directors, Shareholders, and Guarantors

You must appoint a director, or several when forming a limited company. It is no longer required to have r a company secretary. You need the details of the appointed directors, which can be either just yourself or with multiple partners. The following details are required: their names, addresses, dates of birth, and nationalities. For shareholders, you must provide the same type of information along with the number of shares and class of shares they own. The same applies to guarantors but you need to state how much they contributed to the company. Sending detailed information will reduce the chance of your application being rejected.

Keeping these points in mind while applying for a limited liability company will increase your chance of being accepted by Companies House. Getting all of the documents and paperwork needed beforehand will reduce the time it takes to process your application and for it to be accepted. If you are unsure what to do, it is best to use the services of a lawyer experienced in company formation. 

The first step is to find a unique name that suits your business and that does not restrict your vision of the company. Setting the company’s addresses is essential to avoid being rejected for forming a company, and you must know which addresses are mandatory and which ones are optional. Collect all necessary information about the company’s directors, shareholders, or guarantors to send it to the Companies House and ensure all requirements are met and are in order. If you get rejected, it might be due to a small error in the paperwork, so it is worth fixing the error and resubmitting your application.

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