Setting up a new company in the UK is a popular and growing trend. According to the latest statistics, there were over 780,000 new businesses created in the UK in 2020 alone, and this number is expected to continue to rise in the coming years. Whether you’re looking to start a small side hustle or launch a new business venture, the process of setting up a new company can be both exciting and challenging. In this article, we’ll guide you through the step-by-step process of how to set up a new company in the UK.
Step 1: Choose Your Company Structure
The first step in setting up a new company in the UK is to decide on your company structure. There are several options available, including:
- Sole trader: This is the simplest and most common form of business structure in the UK. As a sole trader, you will be personally responsible for all aspects of your business, including any debts and liabilities.
- Partnership: If you’re starting a business with one or more partners, a partnership structure may be more suitable. Each partner will be jointly and severally liable for the debts and liabilities of the business.
- Limited liability partnership (LLP): An LLP is a hybrid structure that combines the flexibility of a partnership with the limited liability of a company. This means that each partner’s liability is limited to the amount of their investment in the business.
- Limited company: A limited company is a separate legal entity from its owners, which means that its liabilities are separate from those of its shareholders. There are two types of limited companies in the UK: private limited companies (Ltd) and public limited companies (PLC).
Each structure has its own advantages and disadvantages, so it’s important to carefully consider your options before making a decision.
Step 2: Choose a Name for Your Company
Once you’ve decided on your company structure, the next step is to choose a name for your company. Your company name must be unique and not already registered with Companies House, the UK’s registrar of companies. You can check if your chosen name is available using the Companies House name availability checker.
Step 3: Register Your Company
The next step in setting up a new company in the UK is to register with Companies House. You can do this online using the Companies House Web Incorporation Service, which is a fast and easy way to register your company. You’ll need to provide details such as your company name, registered address, directors, shareholders, and share capital.
You’ll also need to decide on your company’s articles of association, which are the rules that govern how your company will operate. You can either use the default model articles provided by Companies House or draft your own.
Step 4: Register for Taxes
Once you’ve registered your company with Companies House, the next step is to register for taxes with HM Revenue & Customs (HMRC). You’ll need to register for the following taxes:
- Corporation tax: This is a tax on your company’s profits.
- Value Added Tax (VAT): If your company’s annual turnover exceeds the VAT threshold (currently £85,000), you’ll need to register for VAT.
- Pay As You Earn (PAYE): If you have employees, you’ll need to register for PAYE and deduct income tax and National Insurance contributions from their salaries.
Step 5: Open a Business Bank Account
To keep your personal and business finances separate, it’s important to open a business bank account. You’ll need to provide proof of identity and address, as well as your company registration documents.
Step 6: Get Business Insurance
Finally, it’s important to protect your business with the right insurance. Depending on your business activities, you may need public liability insurance, employers’ liability insurance, professional indemnity insurance, or other types of insurance.
Useful resources
- Companies House: The official UK government website for registering and managing your company: https://www.gov.uk/government/organisations/companies-house
- HM Revenue & Customs (HMRC): The UK government department responsible for managing taxes: https://www.gov.uk/government/organisations/hm-revenue-customs
- Start Up Loans: A government-backed scheme that provides loans and mentoring support for new businesses: https://www.startuploans.co.uk/
- Federation of Small Businesses (FSB): An organization that provides support and resources for small businesses in the UK: https://www.fsb.org.uk/
- Intellectual Property Office: The UK government agency responsible for managing patents, trademarks, and other forms of intellectual property: https://www.gov.uk/government/organisations/intellectual-property-office
- National Business Support Helpline: A free government-funded service that provides advice and support for new and existing businesses: https://www.gov.uk/business-support-helpline
- Business Gateway: A Scottish government initiative that provides business advice and support for new and existing businesses: https://www.bgateway.com/
These resources can help you navigate the process of setting up a new company in the UK and provide you with the necessary guidance and support to help your business succeed.
