There are a variety of different types of businesses in the UK. Therefore, it is necessary to choose one of the most suitable options for the entrepreneur and the type of business to be created.
single Dealer
This is the best option if you want to work autonomously and run the business on your own. Here, the entrepreneur can keep all the profits of the company after paying the due taxes. However, you will be fully responsible for any debt incurred by the company. The company name does not need to be registered, it can be the founder's first name or another one as long as it is not registered and used in another company.
Anyone who decides to follow this business structure must keep records of business income and expenses for tax purposes. For this, it is necessary to apply for a National Insurance number and subsequently register for self-assessment at HMRC (Her Majesty's Revenue and Customs).
If the entrepreneur has never sent a return to this entity, online registration is required. Then HMRC will send a letter with the Unique Taxpayer Reference (UTR) and with this you can activate the online account prepared after signing up for the self-assessment service.
Private Limited Company (Ltd)
In this type of business, the company's properties are independent of the entrepreneur's personal properties. The limitation of this company can be by shares (usually companies that make a profit) or by guarantees (usually not-for-profit companies). In the case of shares, the company has shareholders and they can keep the profits generated by it, after paying the due taxes. On the other hand, in the case of guarantees, the company has guarantors and the profits generated are invested. The company name is at the discretion of the founder, it only needs to end in “Limited” or “Ltd” or its Welsh equivalent. This name cannot be the same or similar to the name of another registered company.
Before registering the company, it is necessary to define the directors and a secretary. This director is responsible for keeping records relating to the company. Such as details of directors, shareholders/guarantors, secretaries, voting results, transactions when someone buys stock in the company, among others, and also financial records such as money received and spent by the company, assets owned by the company, debts, assets bought and sold, among others. These records are useful for the company's annual accounts and tax return. In addition, HMRC may want to consult with them to determine whether the company is paying the appropriate amount of tax. The director is also responsible for reporting any company changes to Companies House.
The last important duties of a director of a private limited company are filing accounts at Companies House, returning company tax to HMRC and paying corporation tax.
Method for registration of a Ltd
For the registration of a company of this type, it is necessary to fill in two documents: memorandum of association and the due statutes of the association. The first is a legal declaration signed by all shareholders/guarantors where they state that they agree with the formation of the company. The second consists of rules described about the management agreed by the shareholders/guarantors, administrators and secretaries of the company. If the registration is done online, the creation of the memo is not necessary as it is created automatically as part of the process.
Company registration costs £12 and must be done at Companies House. Subsequently, this will be sent a certificate of incorporation confirming that the company legally exists. This registration is normally done within 24 hours. If you don't want to do this online, there is the option to send it by post using a specific form, and these requests cost £40 and take between 8 to 10 days. In case there is any rush to create this letter, this letter must be marked “Registered same day” and sent before 3pm at a cost of £100. Other options include using a third-party agent or software.
It is also necessary to choose a SIC code, which is used to identify what the company does and register with HMRC if it has not already been done.
Limited Public Company (PLC)
This type of company is similar to private limited liability companies, distinguishing itself in its shares that can be acquired by the public. A minimum share capital of £50,000 is also required with at least 25% of this amount paid before the company starts business.
Company Unlimited
This type of company is similar to private limited liability companies, with the main difference arising when the company becomes insolvent. Thus, the shareholders/guarantors have unlimited joint liability, which means that they will be able to use the personal assets if the company is unable to pay its debts.
General partnership
It's the simplest way for two or more people to run a business together. These partners jointly share the responsibility for the debts and expenses generated by the company and the profits are shared equally by them. In addition, each partner pays tax on its share of the company. This type of business needs to be registered with HMRC for tax purposes. Therefore, it is necessary to choose a name and a named partner, who will be responsible for managing the partnership's tax returns and keeping proper records.
Limited partnership
This type of business is similar to general partnerships. However, here there must be at least one general partner and one limited partner with different levels of responsibility for the company. Regardless of the type of partner, everyone pays tax on their share in the company's profits. These partners can be individuals or companies, and cannot be both types at the same time. The company name is at the discretion of the partners as long as they do not choose a name already used by another registered company.
It is also necessary to have a registered address. This must be physical in the country where the company was registered and followed the appointment of general and limited partners. As a limited partner, you can contribute money or property to the company once it is established and your liability is limited to the amount contributed. He does not have the power to manage the business and must be registered with HMRC to pay taxes.
As a general partner, he is responsible for the debts incurred by the company and controls and manages the company. He is also free to make important decisions and has a duty to register the company with Companies House and HMRC as well as register as an individual with the latter.
Registration of a limited partnership
For the registration of the company, it is necessary to fill in a form. where all partners must sign. It must then be mailed with a £20 fee attached. Companies House normally registers the business within 5 days of registration. However, if you are in a hurry, it can be written on the letter “Same day registration” at a cost of £100 and it will be registered on the same day if you arrive before 3pm.
Limited Liability Partnership (LLP)
This type of business is established with 2 or more partners, whether individual or company, and are designated as corporate members. Each member pays due tax on their share in the company, but is not responsible for possible debts that the company is unable to pay. The company name cannot be the same or similar to another registered company. Also, it must end in “Limited Liability Partnership” or “LLP” or the Welsh equivalents.
Associated with registration, a contract must be drawn up that states how the LLP will be performed. This includes information on how profits will be shared among members, who needs to agree on company decisions, the due responsibilities of members and how members can enter and exit the partnership.
A physical address in the same country where the business was registered is also required. Likewise, it must have at least two designated partners and for the remaining members there is no minimum number and each member must register with HMRC.
Designated members have more responsibilities in the company than the rest. That is, one of the duties is to register the business with HMRC, appoint an auditor if necessary, keep accounting records, prepare, sign and submit the annual accounts to Companies House and inform this of any changes and register the company in the same way. at Companies House.
The LLP can be registered using approved software, taking approximately 24 hours to register, and there are also options for same-day registration, by mail or through an agent. Once the company is registered, a certificate of incorporation is sent.
social enterprise
This is a type of company that exists to invest any profits made to meet charitable, social, or community goals rather than distributing among shareholders. This business is structured similarly to limited liability companies and includes charities, cooperatives and community interest companies (CIC).
unincorporated association
It is a non-profit organization established through an agreement between a group of people, such as voluntary groups and sports clubs. This type of company does not need to be registered and has no associated cost, as its members are personally responsible for possible debts and contractual obligations.
