There are many types of companies which you can start. The formation of a company doesn’t have to be time consuming when the following advice is taken into consideration.
Sole Trader
Popular with freelance professionals, a Sole Trader only has one employee which is typically the person that started it. By contacting Her Majesty’s Revenue and Customs (HMRC) as soon as a Sole Trader has first been paid for its services, this type of company exists. The name for a Sole Trader can be the name of the person who will be providing services followed by what they do. Once a Sole Trader has been formed, HMRC sends a Unique Taxpayer Reference (UTR) Code by post. A UTR Code is entered when submitting a tax return at the end of a tax year.
Limited company
The process for forming a limited company is more complex than a Sole Trader. Firstly, the registrar’s index of company names should be referred to. This is because you can find out whether the preferred name for a limited company already exists. You can also check whether it is an acceptable name. If it references a governmental organisation or contains an obscene word, it will be rejected.
The next step is to fill in three separate documents which are then submitted to Companies House. These are a Memorandum of Association, Articles of Association and Form IN01. By providing accurate information, the entire application process doesn’t take as long. The preferred name for a limited company should also be put onto these documents too. It typically takes three days to form a limited company after initially submitting the aforementioned forms to Companies House. However, a twenty four hour service is available but it can cost more.
If you don’t want to register a limited company yourself, a Formation Agent can do it on your behalf. Submitting the relevant documents to Companies House, it only costs £30 to hire a Formation Agent. If you’re not certain how to register a limited company, you can get help from a Formation Agent who has done this before on many occasions.
A limited company can be formed on the website which Companies House has. The cost of doing so is £18 and your details are never shared with a third party. If you want to register a company by post, this is possible. However, the total cost of registering a limited company by the postal service is £40. As already mentioned, a limited company can be registered within twenty four hours. By post, the cost is £100 and £40 when done online.
When the relevant paperwork has been submitted, you shouldn’t assume that it exists. Once Companies House has confirmed it exists, it can then be used for trading. If a limited company starts to provide services after paperwork has been submitted, you will waste both time and money. To avoid any embarrassment, you should wait for confirmation from Companies House.
Although it takes longer to form a limited company than a Sole Trader, investing the time and money into either is definitely worth it.
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This post was brought to you by Company Formations 247. Based in the UK, they offer company registration services and other additional business provisions such as registered offices and accountancy packages.