With setting up a business it is essential to have a good working knowledge of business law and strict attention to detail, so seeking professional assistance is vital. JMR Solicitors have the experience and knowledge to guide you through the process and alleviate the stress from the process.
What are the benefits of incorporating a business?
Incorporating your business may give you some protection should your business fail. As a sole trader, you would be personally liable for the debts should your business fail, potentially putting yourself in danger of bankruptcy if the debts owed are considerable enough and you are unable to make repayments. Being a limited company offers some protection against this, as legally a limited company is a separate entity and therefore its finances are separate from the finances of its owners.
As a director of a limited company, your risk of loss is restricted to the money that you have invested in the company itself, providing you don’t trade fraudulently or recklessly. However, please note that you will still be liable for bank loans if you have provided personal guarantees for the limited company.
Being a private limited company may also make you more credible to potential clients, customers, investors or partners.
What you need for setting up a limited company:
There are some ready-made limited company names available to purchase, however, if you wish to form a new limited company you must submit a memorandum of association, articles of association and a IN01 form to Companies House.
JMR Solicitors can help you to complete these applications and draft your memorandum of association and articles of association on your behalf, as these cannot be supplied by Companies House.
What are the responsibilities of a company director?
A private limited company must have at least one appointed director. The director must be over the age of 16 and must not have been disqualified from acting as a limited company director or be an un-discharged bankrupt.
Directors are responsible for notifying Companies House of any changes in the management or structure of the company. All accounts must be filed with Companies House each year, ahead of the requested date, or a fine will be payable. Accounts must also be audited annually unless the company is exempt from this. HM Revenue and Customs must be informed of any taxable incomes or profits by way of an annual return, after which, corporation tax will be payable.
Directors are employees of the company so, therefore, must pay class 1 national insurance contributions and income tax.
What are the different types of business structures available in the UK, and why is incorporating a limited company a popular choice?
In the UK, there are several business structures available, such as sole trader, partnership, and limited company. Incorporating a limited company is a popular choice because it provides limited liability protection to its owners (shareholders). Unlike sole traders or partnerships, the personal assets of the shareholders are not at risk in the event of business debts or liabilities.
What is the process of incorporating a limited company, and how long does it typically take?
Incorporating a limited company involves several steps, including choosing a company name, registering the company with Companies House, and preparing and filing the necessary documents, such as the memorandum and articles of association. The time to complete the process can vary, but with professional assistance from JMR Solicitors, it can usually be done efficiently within a few weeks.
What is the significance of the memorandum and articles of association in the process of incorporation?
The memorandum of association sets out the company’s name, registered office address, and the objects of the company. The articles of association, on the other hand, define the internal rules and regulations that govern the company’s operations and the relationship between its shareholders and directors. These documents are crucial in defining the company’s structure and the rights and responsibilities of its stakeholders.
Can a limited company have just one shareholder and one director?
Yes, a limited company can be incorporated with just one shareholder (often referred to as a single-member company) and one director. In this case, the same person can hold both positions. However, it is essential to comply with all legal requirements and ensure that the director meets the eligibility criteria.
What ongoing obligations and compliance requirements does a limited company have after incorporation?
Once a company is incorporated, it must adhere to various ongoing obligations and compliance requirements. These include filing annual accounts and confirmation statements with Companies House, maintaining accurate and up-to-date company records, and notifying Companies House of any significant changes in the company’s structure or management.
Can a limited company trade under a different name than its registered name?
Yes, a limited company can trade under a different name, known as a “trading name” or “business name.” However, certain legal requirements must be met, and the company’s registered name must still be used on official documents, such as invoices, contracts, and business letters.
What are the tax implications of incorporating a limited company?
Incorporating a limited company can have various tax implications, including corporation tax on company profits and potential personal tax obligations for directors and shareholders. JMR Solicitors can provide expert advice on tax planning and compliance to ensure your business meets its tax obligations while optimising tax efficiency.
Can JMR Solicitors assist with other aspects of business development beyond incorporation?
Yes, JMR Solicitors offers a comprehensive range of business development services beyond incorporation. These may include drafting and reviewing commercial contracts, handling intellectual property matters, advising on employment law, providing dispute resolution services, and offering general legal advice to support the growth and success of your business.
What should I consider when choosing a company name?
Choosing the right company name is essential for branding and credibility. It’s crucial to pick a name that is unique, not already in use by another business, and doesn’t infringe on any trademarks. Additionally, the name should accurately reflect your business’s activities and be memorable to potential clients and customers.
Can JMR Solicitors assist with company formations for non-UK residents or foreign nationals?
Yes, JMR Solicitors has experience in assisting non-UK residents and foreign nationals with company formations in the UK. The team can guide you through the necessary processes and requirements, ensuring a smooth and legally compliant incorporation for your business.