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Steps in Formation of a Company

Steps in Formation of a Company

Formation of a company is important for anyone who wants to conduct business. It makes it easier to receive payments or get loans or equity investments to grow the business. This article will show you the steps to forming a registered firm in the United Kingdom (U.K.). One of the critical steps in the formation of a company is navigating corporate buyouts, and Price Bailey’s expertise in this area can help you. Explore their comprehensive corporate finance services, including assistance with MBO buyouts, to ensure a smooth and successful transition as you establish your new company.

How to Form a Company in the U.K.

Choose a Name

A name is the primary thing differentiating your business from the competition. Thus, pick one in accordance with Companies House rules:

  • It mustn’t be the same as that of another registered business or similar to an established trademark.
  • It can’t contain vulgar and offensive language.

Choose a Legal Structure

There are different legal structures to register a business in the U.K., including:

  • Sole trader: A one-person show. The owner is personally liable for losses or debts accrued by the firm.
  • Partnership: When two or more people agree to incorporate a firm and share responsibility for managing it. The owners are personally liable for corporate debts.
  • Limited Liability Partnership: A type of partnership where the owners are only liable to the extent of capital they invested in their business.
  • Limited Company: The firm has a separate legal identity. Owners aren’t personally liable for corporate debts or losses.

Appoint Directors and a Company Secretary

Every registered corporation must have at least one appointed director. Directors are responsible for managing corporate affairs, including filing financial and tax reports, setting strategy, and day-to-day operations.

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You can also appoint a secretary whose primary role is to ensure the firm complies with regulations. This is compulsory for a public company but not the others.

Choose Shareholders

Every corporation must have at least one shareholder, which can be an individual or another organization. If there are multiple shareholders, you must divide the share capital as agreed between them.

Fill Out and Submit The Application

You need to fill out a FORM IN01. It demands details, including:

  • Proposed name;
  • Legal structure;
  • Registered office address;
  • Details on all directors and shareholders, including valid identification, contact information, and proof of residence;
  • Memorandum of association;
  • Articles of association.

Certificate of Incorporation

If your application is reviewed and approved, you will receive a Certificate of Incorporation acknowledging that your business is now recognized by the government.

How Many People Does It Take to Incorporate a Limited Company?

A limited corporation must have a minimum of one designated shareholder. There is no maximum number of shareholders, so that figure is up to you.

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What Is The Time Frame To Incorporate a Private Limited Company?

It depends on how you send in your application. Doing it online can take as little as 24 hours or, at worst, a few days. If you send it by post, it can take between 8 and 10 days to process and more to receive your Certificate of Incorporation.

What Is The Cost Of Setting up a Company?

If you register online by yourself, you will pay £12, while postal applications cost £40. Yet, you can save the stress of compiling documents and filling out the application by yourself and let Osome do that for £12 to £149.

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How Old Must You Be to Form a Company?

According to U.K. law, every corporate director must be at least 16 years old.

The Difference between a Company Limited by Shares and Limited by Guarantee

Companies limited by shares are governed by share capital; the company has an outstanding number of shares divided between one or more people. Companies limited by guarantee are controlled by multiple people who don’t own shares but instead agree to pay a certain amount toward debts if the business becomes bankrupt.

What Does ‘Limited Liability’ Mean?

It means that shareholders have no personal responsibility for corporate debts and losses.

What Happens If Companies House Rejects My Application?

You will be given an explanation for the rejection. Then, you can make amendments and resubmit it for review.

Conclusion

The U.K. is a big economy and is one of the best places to conduct business. We have shown you the steps involved in company formation in the U.K. If you need help along any step, Osome is available to provide it.

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