Doing business in England: how to set up a Ltd. company

Ltd companies are one of the most popular forms of business in the UK - similar to limited companies in the Czech Republic. Are you tempted to set up a Ltd. company but don't know how to do it? We'll guide you through the whole process so you can start your UK business with confidence.

Whichever company you decide to set up in England, you always start by registering with Companies House, or the local registry of companies. While their website is information-intensive, they do their best to guide you through the process clearly.

1) Make sure Ltd. is a suitable choice for you

The form of business you choose depends on the type of business you run and has a direct impact on how you pay tax and raise funds. In the Czech environment, if you would not hesitate to set up an LLC, then a Ltd. is most likely the right choice for you.

The advantages of Ltd. companies include:

• limited liability separate from the personal assets of the partners;
• Minimum requirements for share capital or shareholder contribution;
• Flexibility in management and operational decision making by the owners.

2) Come up with a company name

A company name or trading name is the name under which a company is registered. Whether you've got your business name figured out or you're just getting started, make sure you:

• the company name in question is free;
• the same name is not protected by an existing trademark.

Companies House do not restrict company names beyond the rules above. In general, ensure that the name:

• Is not easily confused with another existing company (e.g. difference in punctuation only or use of a special character in the name);
• does not contain any offensive language;
• not suggest a connection with government or local authorities (for example, in the form of the word "Accredited", for which you would need special permission from the authorities).

3) Choose a managing director and possibly a secretary

The chief executive officer(director) is formally responsible for adhering to the company's bylaws, keeping books and filing tax reports, maintaining company records and reporting changes to them.

The actual operational aspects of these tasks can, of course, be carried out by an authorised employee, but the managing director is formally responsible for the running of the company and all the formalities that go with it.

The managing director may be one or more persons aged 16 or over. They do not have to be UK residents, but must provide a business or correspondence address. As such, the company must always have a registered office in the UK (see section 7 for details of UK company domiciles).

4) Choose who will be partners or guarantors

English Ltd companies operate in two forms:

• Limited by shares - these are classic companies set up to make a profit. Their members are known asshareholders anddirectors and are liable up to the amount of their contribution and the company's share capital.
• Limited by guarantee - they tend to be incorporated as non-profit companies. Members are referred to asguarantors anddirectors. They are liable for the company's obligations up to the amount of the contributions they have agreed to make to the company.

When registering a company you need at least one member (or guarantor in the case of a non-profit Ltd.) who can also be a director - see point 3 above. They will provide their name, address and the amount of their contribution (minimum £1 each) for the register. The number of partners and their contributions are then summarised in the company's statement of share capital.

This step also involves notifying all persons with significant control over your company (called PSC = Person with Significant Control) - sometimes called beneficial owners. The assessment is based on criteria set out in EU legislation and typically includes people who have:

• more than 25% of the share capital;
• more than 25% of the voting rights;
• the right to appoint or remove a majority of the members of the board of directors.

The number of PSCs is unlimited, or there may be none - but be sure to report this as well.

5) Prepare the incorporation documents

As in the Czech Republic, in the UK, when registering a company, you must provide a memorandum of association and articles of association.

The good news is that if you set up a company in the UK online, the memorandum of association or articles of incorporation will be created automatically during the registration process and you do not have to draw it up separately.

In the case of articles of association, you can either create your own document or use a template freely downloadable directly from the Companies House website.

6) Find out what company records to keep

Records and statements relating to:

• The company itself - information about the directors, shareholders, the results of their votes and resolutions, loans or mortgages secured against the company's assets and other material liabilities or debts;
• finance and accounting - a detailed overview of the company's assets and liabilities, its cash flow, a summary of inventories and goods bought/sold, invoices received and issued, tax documents, etc.

7) Register your company

The final step of the process of setting up a company in England involves registering your registered office address and the so-called SIC code to indicate your line of business. You choose it from a list of all the business activities that can be registered in England.

The following rules apply for a company registered office in the UK:

• You cannot use a P.O. Box address, only a formal address;
• a formal address means a physical address in the UK and its jurisdiction (i.e. including Wales, Scotland and Northern Ireland);
• it is important that official mail delivered to this address is actually within the knowledge of someone acting for the company and the deliverer can make a record of non-delivery;
• you can rent the address from a third party in the form of a virtual registered office, but it must meet all the conditions above.

If you as a business do not meet these conditions, Companies House will not even allow you to set up a new company. For existing companies that report a PO Box as their official address, Companies House will then automatically move your registered office to one of their 3 UK addresses and give you a period of time to rectify this. At that point you lose control of your incoming mail and, in addition to penalties, you may face operational complications.

The final step in the process is the actual registration of your new Ltd company in England, where you will receive a digital certificate of incorporation. This confirms that your company has actually been legally formed and gives its identification number and official date of incorporation.

Ideally, you should complete your corporation tax registration straight away. You will need the aforementioned certificate as well as at least three personal details about you and your partners (e.g. place of birth, passport number, mother's maiden name, etc.).

After filling in all the required information and paying the administration fee, you can usually enjoy your new company within 24 hours.

Handle UK company registration with ease

We have many years of experience in doing business in the UK market and setting up Ltd companies. Set up a company in the UK with us and you'll be confident that you meet all the legal requirements - including requirements for the company's registered office, control of the incorporators and the accuracy of the incorporation documents.

Contact us using the form below and we'll design a bespoke solution for you.

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