What is Company incorporation in United Kingdom?
It is economy's largest business city. Place to visit and popularly known as dream of Individual, do have a point of attraction as always as a center for business/trading. Well-equipped infrastructure, basic and fundamentals facilities, strong governance and well-implemented rules and regulation have made it a favorite destination for office location of people across the globe. It is most important nowadays to have a place in United Kingdom (UK) to give global presence of own company. There is high demand for property and its price is increasing day by day due to an attractive place to get the presence in globe for advancement of business across the globe.
Business Structure & Company Incorporation Procedure in United Kingdom
There are several forms of business structure, mostly and widely popular are discussed as below: -
1. Sole Traders
It is very simple to form and run but the risk and challenge are that the person is personally liable/responsible for business's debt. Person can trade under own name or another name. If choose another name, registration of that name is not required. Person is required to include name on official paperwork (e.g. Invoices & Letters). Person doing sole traders form of business, require to register for Self-Assessment and file tax return every year. Sole Traders are responsible to keep records of business's sales and expenses, pay income tax on profits by sending self-assessment tax return every year and class 2 and class 4 National Insurance. VAT registration is required if Vatable Turnover is over than £85,000 otherwise option is on sole trader either to take registration under VAT or not.
It is the simplest way for 2 or more people to run a business together. You need to choose name, choose a designated partner and register with His Majesty revenue and customs (HMRC). Designated Partner is solely responsible for managing the partnership tax return and keeping business records.
Person willing to do partnership, required to register partnership for Self-Assessment with HMRC if person is "nominated partner". It means person is responsible for sending partnership tax return. The others partners need to register separately. Person must register by 5 October in business's second tax year or person could charge a penalty. For example, if you started a partnership or became a partner during the 2017 to 2018 tax year, person must register before 5 October 2018.
Partnership can be register using FORM SA400 or FORM SA401 as the case may be for Online or Offline respectively.
Partnership must be register to VAT department if VAT taxable turnover is more than £85,000.
The company registered in United Kingdom is basically govern by Companies Act, 1985 as amended thereof and the Income and Corporation taxes Act 1988 of United Kingdom as amended and make applicable to corporate. English is the language of legislation and corporate documents. A company incorporated in the United Kingdom has the same power as a Natural Person.
There are basically four types of company that can be registered:-
- Private Companies (Limited by Shares)
- Private Companies (Limited by Guarantee)
- Private Unlimited Company
- Public Limited Company
While summarizing the Companies Act, 1985 regarding the procedure of incorporation of company in United Kingdom the entire procedure can be summarized with the submission of the Memorandum (MOA) and Articles of Association (AOA), Declaration of Compliance and Statement by the First Directors and Secretary, notification of the location of the Registered Office and payment of the requisite fee to Companies House unless otherwise specified. It is requirement of statute that registered office (RO) must be maintained in the United Kingdom. People across the global want to have their registered office at London due to financial hub and center of attraction to all global.
And the desire of people to incorporation of business in London is the availability of a same-day incorporation service.
Person willing to have business in United Kingdom but decide not to incorporate in London will have their company registered at the principal Companies Registry for England and Wales in Cardiff.
In addition to the Cardiff Registry, which covers England and Wales, there are also company registries in Edinburgh for Scotland and Belfast for Northern Ireland.
Moving forward let’s have a look on step by step formation of company in United Kingdom as stated in Companies Act, 1985 read with corresponding rules and applicable laws:-
This form of company is legally separate from the people who run it. It need to be register with Companies House. Before registration, there must be suitable company name, address for company, at least one director, details of the company’s share (required at least one shareholder) which is not applicable to private company limited by guarantee, Standard Industrial Classification of Activities (SIC) Code, shareholders to agree to create the company and written rules (Known as MOA & AOA), details of people with significant control over company (i.e. anyone with more than 25% shares or voting rights). After all this pre requisite to incorporate company can move for registration of company in United Kingdom.
Person can register online if company is limited by shares and uses standard AOA. It cost £12 and can be paid by debit or credit card or PayPal account. Your company is usually registered within 24 hours. If not online then company can be register by post using FORM IN01. Postal application takes 8 to 10 days and cost £40 (paid by cheque made out to Companies House). The next option is also there for same day service if you get your application to companies’ house by 3 pm and pay £100 and envelope must be marked “Same Day Service” in the top left-hand corner.
Once the company is registered, person will received “Certificate of Incorporation” (COI). COI assured the company being legally formed and incorporated and gives company registration number and date of incorporation. You also need to register for Corporation tax within 3 months of starting to do business. You need your company 10 digit Unique Taxpayer Reference (UTR) before you register for Corporation Tax Online. UTR is posted to your company address by HMRC, usually within a few days of the company being registered with Companies House. You have to provide company registration number, date you started to do business (your company first accounting period) and date your annual accounts are made up to then HMRC will provide corporate tax number on the basis of which annual corporation tax return to be submitted irrespective of profit or loss. Which means filing of return is mandatory.
This is brief of incorporation of company in United Kingdom as we know it is hub for much multinational company for having presence across the globe. United Kingdom is always attaining light of lime with different corporate and non-corporate issues which people around a world want to be there at any cost with any means and one of most popular way is to have office of their business at United Kingdom.