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E-Quick Package |
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 £ 32.00 | No Annual Fees! | | |
 This is our most popular package with UK residents, and includes:
 The submission of forms detailing your company's executive officers
The registration of your £1,000 authorised share capital (a minimum of one share must be issued)
Company formation is usually achieved within 6-8 workday hours (Companies House permitting)
Payment of UK legal and initiation fees
The appointment of your own candidates as directors and secretary (a minimum of two people are required)
The following documents will be e-mailed to you (Note: these documents are to be printed and signed):
Electronic Certificate of Incorporation (PDF)
Electronic Memorandum & Articles of Association (MS Word)
Minutes of the First Meeting of Directors (MS Word)
Share Certificates and company Register
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Economy Package |
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| £ 82.00 | Annual Maintenance Fee £50.00 | | |
This is our most popular package with EU residents, and includes:
The submission of forms detailing your company's executive officers
The registration of your £1,000 authorised share capital (a minimum of one share must be issued)
Company registration is usually achieved within 6-8 workday hours (Companies House permitting)
Payment of UK legal and initiation fees
The appointment of your own candidates as directors and secretary (a minimum of two people are required)
A registered office address for 12 months, provided by Coddan
An application form for the following year's renewal of the Registered Office Address service (£50.00)
Annual Return and Annual Account reminder
The following documents will be e-mailed to you (Note: these documents are to be printed and signed):
Electronic Certificate of Incorporation (PDF)
Electronic Memorandum & Articles of Association (MS Word)
Minutes of the First Meeting of Directors (MS Word)
Share Certificates and company Register
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Premier Package |
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| £ 131.95 | Annual Maintenance Fee £99.95 | | |
This is our most popular package with small business, and includes:
The submission of forms detailing your company's executive director
The registration of your £1,000 authorised share capital (a minimum of one share must be issued)
Company incorporation is usually achieved within 6-8 workday hours (Companies House permitting)
Payment of UK legal and initiation fees
Applicant appointment of director for company (appointed electronically)
A registered office address for 12 months, provided by Coddan
An application form for the following year's renewal of the Registered Office Address service (£50.00)
Nominee company secretary service for 12 months (next year - £49.95)
Annual Return and Annual Account reminder
The following documents will be posted to you (these documents will be sent via Royal Mail):
The original laminated Certificate of Incorporation
A bound copy of the Memorandum and Articles of Association
The Minutes of the First Directors' Meeting
Two printed share certificates and Company Register
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Deluxe Package |
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| £ 256.95 | Annual Maintenance Fee £224.95 | | |
This is our most popular package with overseas residents, and includes:
The filing and registration of your company in England
The registration of your £1,000 authorized share capital (a minimum of one share must be issued)
Company formation is usually achieved within 6-8 workday hours (Companies House permitting)
Payment of UK legal and initiation fees
A registered office address for 12 months, provided by Coddan
An application form for the following year's renewal of the Registered Office Address service (£50.00)
Nominee Company secretarial service for 12 months (next year - £49.95)
Coddan provides a company nominee director service for 1 year (next year - £125.00)
The name of the nominee director & secretary will appear as a public record
Annual Return and Annual Account reminder
The following documents will be posted to you (these documents will be sent via Royal Mail):
The original laminated Certificate of Incorporation
A bound copy of the Memorandum and Articles of Association
The Minutes of the First Directors' Meeting
Two printed share certificates and Company' Register
A pre-signed, undated letter of resignation from the nominee director
A General Power of Attorney signed by nominee director
An indemnity Letter for General Power of Attorney
A nominee service agreement which provides for the indemnification of the nominees
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Name Protection |
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| £ 22.00 | Annual Maintenance Fee £60.00 | | |
The purpose of this package:
This package allows you to register a company name with Companies House and thus prevent this name being used to form a company by anyone else
This package includes:
The registration of a non-trading limited company with your choice of name
Payment of UK legal and initiation fees
A nominee director
A nominee secretary
A nominee shareholder
A registered office address
Management of the company:
Coddan will file the annual return and dormant company accounts on your behalf for an annual fee of £60.00
If you do not wish to renew the management option at the end of term, the company will be dissolved
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| Business Start-Up: Legal Requirements | | |
Company subscribers may be residents outside the UK
You must appoint a minimum of ONE Director
There is no maximum number of Directors
Directors can be corporate bodies or private individuals
A Director can be of any nationality
Directors need not be formally trained
All companies must appoint a company Secretary
Secretaries can be corporate bodies or private individuals
A Secretary can be of any nationality.
If there is only ONE Director he or she CANNOT also be the Secretary
A company must have a minimum of one shareholder who may be a corporate body or an individual
No minimum paid up share capital
A minimum of one share may be issued
Capital may be denominated in any currency
Shareholders and directors meetings may take place outside Great Britain
The company is required to have a registered office in the UK
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(click here for other packages)
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| 1. Company subscribers may be residents outside the UK.
2. You must appoint a minimum of 1 Director.
3. Directors can be corporate bodies or private individuals.
4. A Director can be of any nationality.
5. All companies must appoint a company Secretary.
6. A Secretary can be of any nationality.
7. If there is only ONE Director he or she CANNOT also be the Secretary.
8. There is no maximum and no minimum share capital.
9. There is no minimum share capital, no paid-in capital requirement.
10. The company is required to have a registered office in the UK.
 +44 (0) 207.748.3039
+44 (0) 800.081.1510
 info@uk-ltd-formation.co.uk |
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- DEAR VISITORS, If you want to become familiar with the description and the contents of company formation packages, offered by our company and to find above, what kind of service is included in this or that formation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the company incorporation within foreign countries, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen.
Company Formation Services For Just £42.00
Register your new company in six-eight hours
How to set up a Limited Company in England, Scotland, Wales and Ireland?
Form a Limited Company Online.
International Company Formations
Our company formations service is simple and quick to use. For just £42.00 you can incorporate a brand new limited company complete with memorandum and articles of association and official certificate of incorporation. Electronic Filing service, which means your company will be registered within 6-8 hours, using details supplied by you to form your own digital signature, with you own directors, secretary and shareholder, so that the company is ready for use immediately. This service comes as standard with all of our formations. We provide a secretarial service to ensure that these important statutory requirements are fulfilled, leaving the day to day running of the company to the directors.
Company Formation Services for Just £42.00
See more information about our UK and offshore company formations
Please note » The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the incorporation of companies and electronic filing of Companies House forms. We are not able to guarantee that any such filing will be acceptable to Companies House, nor are there any contractual obligation upon us to do so. If Companies House rejects incorporation or other electronic filing, we will credit your account with a full refund and the contract between us will be made void. Companies House does not offer a cancellation facility for the incorporation of companies or the electronic filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site (www.uk-ltd-formation.co.uk) are in Great British pounds.
Live Help » Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours our business center will be closed. When you click on the button you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is absolutely free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
 Why Establish A Business In The UK?
The UK has a minimum of business formalities for establishing a business. The UK favours foreign investment. There are no exchange controls or restrictions on the introduction of capital or the repatriation of capital and profits and there are no currency regulations. Private limited companies can be formed very rapidly and easily. There are many subsidies and grants for businesses in particular areas ("Enterprise Zones", "Development Areas", "Intermediate Areas", etc.) with grants available from the UK Government and the European Union and other European institutions. The current rates of UK Tax are low in comparison with many other western countries. The UK has double taxation agreements with many other countries.
- Introduction:
This guide is intended only as a summary since the United Kingdom has complex legislation on company law, tax law, employment law, property law and laws relating to the environment, banking and financial services. It is not possible in a short publication of this sort to cover such matters in detail. The guide is however intended to give individuals or organisations who are considering investing in the United Kingdom a general understanding of the relevant legal points. Any questions on particular matters should however be the subject of professional advice.
- Legal Forms Of Business:
Limited Company. Private limited company. We offer a choice of limited company formation packages to suit your practice requirements. We do not cut costs on expertise and quality but still maintain a cost effective pricing structure. Many agents say they provide these items but will only actually complete them at an extra cost! Let Coddan incorporate your business today. All you'll need to do is fill out our online order form, and we'll take care of the rest. Prices starting at £42.00 for complete company incorporation with a FREE online company name check. Then when your new limited company has been formed you will receive by email, your new limited company certificate of incorporation, your new limited company's memorandums & articles. The company certificate will be sent out in PDF format and your M&A's, these can then be printed as required. (E-Quick Formation Package - £42.00. Complete. No Registration Fees or Any Other Hidden Charges.) Since the Companies Act 1989 it is now possible to have a single shareholder. There is no minimum capital requirement. A private company can convert itself into a public company and vice versa.
Public limited company. These are usual for large enterprises, however they need not necessarily be quoted on the Stock Market or any other market. There is a minimum capital requirement of £50,000 of which 25% must be subscribed and paid up.
Subsidiary company. An overseas company may choose to form its UK investment through a subsidiary company formed in the United Kingdom. Alternatively a subsidiary can be formed in an overseas jurisdiction and a branch of that subsidiary can be established in the United Kingdom.
Branch. An overseas company may establish a branch in Great Britain. This is not a separate legal personality but merely an extension, or office of the overseas business. The branch will be required to register at Companies House (within one month of establishment) as an overseas company, filing annual accounts and details of directors and secretary. This information will be available to the public for inspection. One way of reducing such disclosure would be to form a subsidiary in another country, which then establishes a branch in Great Britain so that only details of the subsidiary need be disclosed.
Place of business. A place of business is a premises where there is a physical or visible indication that the company may be contacted there. An overseas company also has to register if it habitually conducts business from a particular location in Great Britain even if there is no physical sign of the company's connection with it.
Other forms of company. It is possible to form companies limited by guarantee or unlimited companies, but this is beyond the scope of the present summary.
Partnerships consortia and EEIGs. It is possible for individuals (or companies) to form partnerships in the United Kingdom but these are usually used for particular purposes which are beyond the scope of the present summary. Consortia are frequently used by construction companies when jointly tendering for construction work. An EEIG is a creature of European Union law and is intended as auxiliary to the principal activities of its own members (e.g. distribution, research and development, marketing, construction projects etc.). An EEIG should not create profits on its own account and in the UK its members are taxed as if they formed part of a partnership.
- Choosing a Legal Entity:
A limited company is registered at Companies House. It must operate within the Companies Acts and is governed by its own memorandum and articles of association. There are different types of limited company but they all have these qualities.
Every company has a constitution in the form of memorandum and articles. A company must have both directors and members. (Members are shareholders unless the company is limited by guarantee).
Once registered a company has corporate personality. It is a legal entity (or legal person) with its own legal rights and obligations, separate and distinct from those of its members. The company's property is its own and is not treated as belonging to the company's shareholders and directors. The company itself can enter into contracts, employ people, sue and be sued and can be liable if it commits criminal offences.
The key feature of a limited company is that it offers limited liability to its members. The company (as a separate legal entity) is liable for its debts and the members and directors are not personally liable (unless they have acted wrongly in some way). The members' liability is limited to paying for their shares.
- UK Private Companies Limited by Shares:
The vast majority of trading companies are private companies limited by shares. There are over one million such companies registered at Companies House. Such a company must have the word 'Limited' or 'Ltd' at the end of its name.
Many private companies are very small. There is no minimum capital requirement in respect of a private limited company and it is commonly less than £100. Approximately 90% of private companies are small or medium sized companies which means that they can file modified (i.e. simplified) accounts at Companies House, rather than full accounts.
A private company may not offer shares or debentures to the public CA 985, sec. 81, only a public company (PLC) may do so.
Every company must deliver an annual return to Companies House within 28 days of its made-up date. A company's director(s) and secretary are responsible for ensuring that the annual return:
Is delivered to Companies House within 28 days after the anniversary of incorporation or the anniversary of the made-up date of the last annual return; and gives a true picture of the management structure and capital (if applicable) of the company at the made-up date.
Remember: It is a criminal offence not to deliver the company's annual return within 28 days of the made-up date, for which company secretaries and directors may be prosecuted.
- UK Public Limited Companies (PLC):
A small proportion of companies are public companies. Such a company must have a name ending in the words 'public limited company' or 'PLC'. This type of company is appropriate for larger businesses where shares are intended to be available to the general public. Most public companies are not set up as such but are converted from private ones.
For Public Limited Companies you must appoint a minimum of TWO directors (plus a Company Secretary).
A public company must have a minimum authorised share capital of £50,000, of which at least one-quarter plus any share premium must be paid up before the company starts trading: CA 1985, sec.11, sec.118, se.c101.
A PLC must have an issued share capital of not less than fifty thousand pounds of which a minimum of 25% must be fully paid up. Shares cannot be issued for an undertaking to do work or perform services, payment for shares may only be by 'cash' or a 'non cash' consideration. The latter method would normally be in respect of a property or other tangible asset and completed within 5 years of the allotment. A PLC is not obliged to float its shares or offer them for sale, and it can remain as private as the shareholders wish and as with private limited companies if the shares have been fully paid there is no shareholder liability. A PLC enjoys increased status because of the larger capital base. A PLC requires two shareholders and two directors one of whom may also be the company secretary. A company registered as a public company on its original incorporation cannot commence business or exercise its borrowing powers unless the Registrar has issued it with a certificate of entitlement to do business and borrow (the trading certificate) which normally takes approximately two weeks to process.
This is the only type of company which may raise capital by offering securities (shares or debentures) to the public. This is usually done by obtaining a listing on the Stock Exchange. Public companies are subject to more stringent legal requirements than private companies on a wide range of matters, but especially in relation to share capital, directors and accounts.
- UK Property Management Companies:
A property management company is a type of private limited company. Such a company will be set up in order to hold an interest in property which is being divided into units, each unit being owned separately. A typical example is a large house which has been divided into a number of flats, each flat being owned by one or two people. There will usually be a need for somebody to own the building as a whole, including common parts such as stairways, gardens, access paths etc. Unless there is a landlord retaining this interest, the simplest legal device is for a company to be set up to own the freehold of the property, and for each owner of a flat to have an interest in the company.
Some property management companies will do no more than hold the title to property and so can be considered as dormant companies under the Companies Acts, allowing pro forma dormant company accounts to be registered at Companies House. This helps keep administration costs to a minimum and is useful where the property is small with little or no routine maintenance which can be arranged between the owners of the flats without involving the company.
A Flat Management Company has its Memorandum and Articles of Association specially drawn up to allow the company to own, manage and administer the property, which is normally divided into several dwellings, units or flats. When a property is divided into a number of flats, each flat owner has a lease of their own flat but they may also hold shares in a management company that owns the freehold (or lease) of the entire building.
- UK Companies Limited by Guarantee:
A company limited by guarantee is private company, very like a private company limited by shares, but it does not have a share capital. It is widely used for charities, clubs, community enterprises and some co-operatives. The vast majority of such companies are non-profit distributing, but they do not have to be.
A company limited by guarantee is registered at Companies House, has a set of memorandum and articles, directors, etc and is subject to the requirements of the Companies Acts (except those relating to shares). There are no shares and so no shareholders, but such a company does have members, who meet and control the company through general meetings. The directors are often called a management committee or council of management, etc but in law are still company directors and subject to all the rules that affect other directors.
A company limited by guarantee confers limited liability as effectively as a company limited by shares. The memorandum states that the members of the company guarantee to pay its debts, but only up to a fixed amount each. Usually that sum is £1.00, and no member can be liable for more than that amount if the company fails.
- UK Unlimited Companies:
Many people refer to a sole trader's business or a partnership as an unlimited company, but such businesses are not in fact companies. It is possible to register at Companies House a private company which is unlimited, that is the members accept complete liability for the company's debts. If the company needs money to pay its debts a call can be made on each of the shareholders to contribute a fixed amount on each share held by them.
An unlimited company has all the other features of a private company limited by shares. It is registered at Companies House, has members, directors, memorandum and articles, etc. Its one major advantage is that it is not required to register annual accounts at Companies House.
- Conversion From One Type to Another:
A private company limited by shares can be converted into a public company and vice versa, or to an unlimited company. An unlimited company can be converted to a private company limited by shares. A company limited by guarantee cannot be converted to a company limited by shares or vice versa.
- Can a Company be Converted From One Type to Another?
A company can be converted from one type to another by re-registration within the terms of the Act. There are procedures for re-registration from private to public and vice versa and from private limited by shares to unlimited and vice versa. There is no provision for a company limited by shares to be re-registered as one limited by guarantee or for the reverse process and there are restrictions on a company which has previously changed from limited to unlimited or vice versa changing back again.
On re-registration the company keeps its original company number and remains the same corporate identity. Re-registration does not affect any existing rights or liabilities of the company.
- Private Company Re-Registering as Public:
By CA 1985, sec43 a special resolution must be passed providing that the company be re-registered as a public company and that the necessary amendments are made to its memorandum and articles. The special resolution is sent with an application on form G43(3) signed by a director or secretary together with the following documents: memorandum and articles as amended; a statement by the auditors that in their opinion a balance sheet prepared as at a date not more than seven months before the application shows that the company's net assets were not less than the aggregate of its called-up share capital and undistributable reserves; a copy of that balance sheet with a copy of an unqualified auditor's report; if any shares have been allotted other than for cash since the balance sheet date, a valuation report on the assets accepted as consideration for the shares; a statutory declaration on form G43(3); by a director or secretary of the company that: the special resolution has been duly passed; the nominal value of the company's allotted share capital is not less than the authorised minimum of £50,000; each allotted share is paid up to at least one-quarter of its nominal value and the whole of any premium; covering various matters relating to shares issued other than for cash (on which there are additional provisions); there has been no change in the financial position of the company between the balance sheet date and the application by the company for re-registration that has resulted in the company's net assets becoming less than the aggregate of its called-up share capital and undistributable reserves.
If the application is in order the company will be issued with a certificate of incorporation stating that it is a public company. On the date of issue of the certificate the company becomes a public company and the alterations to the company's memorandum and articles of association become effective.
Public company re-registering as private (CA 1985, sec.53, sec.54, sec.55). A special resolution must be passed that the company be re-registered as a private company and making the requisite changes to the memorandum and articles. Twenty eight days must lapse, during which time any dissenting members may apply to the court. Then an application on form G 53, signed by a director or secretary, must be sent to Companies House with the special resolution and a copy of the memorandum and articles as altered.
Members who oppose the proposed re-registration may apply to the court for cancellation of the resolution within 28 days (provided they did not vote in favour of the special resolution). Such an application may be made by any 50 members or by the holders of at least 5 per cent of the nominal value of the company's issued share capital (or any class thereof). The company must immediately give notice of any such application to Companies House on form G54. If the court makes an order cancelling or confirming the resolution, an office copy of the order must be registered at Companies House. The court has wide powers on hearing such an application.
In the absence of any such application and if satisfied that the company may be re-registered, Companies House will issue a certificate of incorporation for a private company. The company then becomes a private company and the alterations in the memorandum and articles set out in the special resolution become effective.
Private limited company re-registering as unlimited. The following procedure is required for a private limited company to re-register as an unlimited company (CA 1985, se.c49): The company must send to Companies House an application on form G49 (1) signed by a director or secretary. The application must set out any necessary alterations in the memorandum and articles and it must be accompanied by: a form of assent on form G49(8)(a) to the company being registered as unlimited, signed by or on behalf of every member; a statutory declaration by the directors on form G 49(8)(b) that all the members have signed the form of assent and that where the form was signed by an agent that they have taken reasonable steps to satisfy themselves that each agent was empowered to sign on behalf of the member; a copy of the memorandum and articles incorporating the alterations set out in the application.
If the application is in order Companies House will issue a new certificate of incorporation and the alterations to the memorandum and articles will be as valid as if they had been adopted by special resolution: CA 1985, sec.50.
Unlimited company re-registering as a company limited by shares or guarantee. An unlimited company may re-register as a private company limited by shares or guarantee by following the following the procedures in CA 1985, sec.51. If it wishes to reregister as a public company, it must follow the procedures in sec48. It must pass a special resolution to be re-registered and stating whether the liability of the members is to be limited by shares or by guarantee and, if the former, the amount of the share capital. It must effect the alterations to the memorandum and articles.
The special resolution must be sent to Companies House with an application on form G51 signed by a director or secretary, together with a copy of the altered memorandum and articles. If the application is in order Companies House will issue a new certificate of incorporation.
If the company goes into liquidation within three years after re-registration, any member of the company at the time of re-registration remains liable to contribute without limit to the assets of the company in respect of debts and liabilities contracted before it was reregistered: IA 1986, sec77.
Subsequent re-registrations. An unlimited company which was previously limited may not reregister as limited (sec.51(2)), nor may a limited company which was previously unlimited change back again (sec.49(2)).
- How Does Limited Liability Work?
The basis of limited liability is that all debts incurred by a company are the company's liabilities and not directly the legal liability of the shareholders or of the directors. The company is a separate legal person from the shareholders and the directors. The company incurs debts in the course of its business and only the company is liable for those. The shareholders' obligation is to pay the company for the shares they have taken in it. Once the shares are fully paid for (and this would usually be the case with a private limited company) no further money is payable by the shareholders.
The directors incur no personal liability as all their acts are undertaken as agents for the company. However, there are certain circumstances where liability may be imposed by the court, particularly in respect of wrongful or fraudulent trading.
- What are the Advantages and Disadvantages of Having a Company?
Limited Liability. For many people this is the deciding factor. Starting a new business is often a risky venture, usually people are putting into the business their personal savings and often they are giving up secure employment to start their own firm. It is often important to them to know that their risk is limited to these amounts and that if the business fails they will not be liable beyond the amount of capital they have decided to put in. They can in this way protect their house and other personal assets from being sold to pay the business debts. Without such limited liability, the ultimate risk of business failure is personal bankruptcy.
The limited company will, however, operate subject to the following practical considerations: Bank Borrowing. If the company borrows money from a bank, the bank will automatically require the directors of the company to give personal guarantees (i.e. to contract that they will pay back the bank if the company fails to do so). The bank may also require security over the company's assets and/or the directors' personal assets (e.g. a mortgage - or second mortgage - on a director's house).
Landlords. A landlord may insist that if a small limited company is going to take a lease of premises the directors give personal guarantees, for payment of the rent, or other obligations under the lease.
Trade suppliers. Some trade suppliers may also require personal guarantees. This tends to happen only with major suppliers of the business, e.g. breweries to pubs/winebars, petrol companies to garages, franchisors to franchisees.
Liability for insolvent trading. If a limited company does become insolvent, the people running it can be made personally liable for some or all its debts if they have incurred debts which they knew the company could not pay (fraudulent trading) or, once they knew or ought to have known that the company would become insolvent, they have failed to take steps to minimise the loss to the creditors, by failing to put the company into liquidation or at least stopping the business (wrongful trading). Apart from being made liable for the company's debts, the directors could incur other penalties, such as a fine (or even imprisonment) for fraudulent trading or being disqualified from acting as a director. Non-legal pressures to pay creditors. People do not like not paying their debts and creditors do not like not being paid. Sometimes people will personally pay their company's debts, or some of them, because they do not wish to default, and feel obliged by moral pressures or the unpleasantness of being pursued by creditors. (vi) The amount of risk
Some types of business involve substantially more financial risk than others. This depends on such factors as the amount of capital involved in setting-up the business, the nature of the trade itself, and how easy it is to reduce the outgoings to match the income. At one end of the scale a service business which can be run from home, with little or no assistance, without expensive capital equipment and where very little has to be expended before invoicing the client, involves low risk and can probably be safely run as a sole trader/partnership. On the other hand a manufacturing business which needs premises, expensive machinery, the purchase of raw materials, the employment of staff, etc. all before anything can actually be made, let alone sold, involves high risk and would normally be incorporated.
Taxation. Registered companies are subject to a different tax structure (corporation tax) from sole traders or partnerships. The choice of structure can make a substantial difference to the amount of tax paid on the same trading profits.
Formalities. Registering a limited company and the continuing registration requirements are additional formalities which do not apply to sole traders or partners. The initial formalities for a registered company are: Preparation of memorandum and articles of association. Completion of forms for directors, company secretary and registered office. Registration with Companies House. Compiling statutory registers, etc.
The continuing formalities are: Keeping the registered information up to date, both at Companies House and on the company's own registers. (Information to Companies House must be sent on the right official form). Submitting an annual return and accounts. (In many cases accounts must be audited). Holding board and general meetings and keeping minutes. A sole trader is not involved with any of these. A partnership should have a partnership agreement drawn up (though this is not an absolute legal requirement).
Privacy. A registered company has to send information about itself to Companies House, where it is put on public file. Anybody can request a copy of the file and so can look up all the registered details of the company. Information from Companies House is increasingly being made available on-line. The information includes a copy of the annual accounts (though for small companies this need be only a simplified balance sheet) and details of the company's directors, including share ownerships, other directorships, home addresses, etc. Some people do not like this amount of information being publicly available.
On the other hand, the availability of this information can make it easier for the company to get credit, once it is established, because a search at Companies House can show that the company is of a certain size and appears to be stable and growing.
The floating charge. A floating charge is a mortgage of (usually) all the company's assets, both present and future, and on terms that the company may deal with the assets in the ordinary course of business. It is a good way, and in practice the only way, of using the assets of a business other than the premises as security for a loan. A floating charge is usually included in a debenture (perhaps with a conventional mortgage on the premises and other fixed assets) and is usually in favour of a bank.
The floating charge is a factor in the choice of business format because only registered companies can create floating charges. A sole trader or partnership, with exactly the same assets, cannot give this type of mortgage. So if the business needs to borrow money and the bank (or other lender) wants a charge on all the assets, the business will have to be a registered company.
The bank may have a second reason for wanting the business to be a limited company. It is usual for banks to require directors of small companies to give personal guarantees of any loans to their companies. If the business fails, the bank is better protected if the business is a limited company because only the bank will have a personal guarantee and so access to the owner's personal assets. If the business is in the format of a sole trader or partnership, all the creditors have access to the owner's personal assets.
Name protection. The only system for the registration of names is that for registered companies. If the name is important to the business, its owners may want to obtain registration so as to prevent anybody else registering it and to warn anyone searching the index of companies to avoid similar names. Even if the business is to be a sole trader or partnership, a company can be registered in the same name and kept dormant indefinitely (provided an annual return and dormant company accounts are registered each year). This will prevent the same name being registered by anybody else and in practice, will tend to inhibit the registration of similar names.
Continuity. One of the advantages of a registered company is that, being a separate legal entity, it keeps going indefinitely, regardless of who owns or directs it. This can be an advantage where ownership or control is going to change.
Flexibility. A sole trader/partnership structure is very flexible provided the ownership and control patterns are simple, i.e. a small number of people owning and contributing to the business in a very straight-forward way. The company structure, with the possibility of creating different classes of shares and having directors who may, but need not be, shareholders, allows much more complex patterns to created.
Appearance of size. Bigger businesses are nearly always companies and so some small businesses are registered so as to create an impression of size.
Outside investment. A further advantage of becoming a limited company is that the shareholders do not necessarily have to be directly involved in the running of the company. It is also often the case that it will be easier to acquire further investment for the business if it is a limited company again mainly due to the benefit of limited liability. The company structure is ideal for offering outside investment in the business as appropriate amounts and types of shares can be set up. Investment in a partnership is legally risky as someone who shares the profits of a partnership may be regarded as a partner and may incur unlimited liability for all the debts.
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