How to Register a New Business with Companies House

14 November 2022|Related :

When setting up a business, there’s a lot you’ll need to consider, such as whether you intend to start up as a sole trader or open a limited company. Depending on your decision, you may need to register with Companies House.

Almost 10% of online applications and around half of postal applications are rejected due to simple mistakes which could have easily been avoided.

That’s why in this guide, we’ll be explaining all you need to know about registering your business with Companies House.

What is Companies House?

Companies House is a government run regulatory body for the registration of companies and maintenance of company records. 

Does My Business Need to Register with Companies House?

Whether or not you need to register with Companies House depends on the type of business structure you decide upon when setting up. If you set up a limited company, you are legally required to register with Companies House.

What’s the Difference Between a Sole Trader and Limited Company?

Sole Trader

A sole trader operates as a self-employed person who registers a business with HMRC. Sole traders can work on their own, or employ other people to work for them, however they will be entirely responsible for the business and its liabilities as there is no legal distinction between you and your business.

While you don’t need to register with Companies House, you are still required to register for Self Assessment with HMRC to report your earnings and expenses so you can accurately pay Income Tax and National Insurance contributions.

Advantages of Being a Sole Trader:

  • You can register online in minutes.
  • There is no need to incorporate the business at Companies House.
  • No cost to register the business.
  • Less bookkeeping, accounting and filing requirements compared to limited companies.
  • Lower accounting costs.
  • Full ownership of the business and therefore full control.
  • Quick and easy to make decisions.
  • All profit after tax belongs to the sole trader.
  • No business or personal details are disclosed on public record.

Disadvantages of Being a Sole Trader

  • Sole traders are responsible and liable for all business debts and claims as there is no legal distinction between the individual and the business, therefore there is no distinction between personal and business finances.
  • Can be trickier to raise capital.
  • All taxable income is liable for Income Tax and National Insurance contributions.
  • Less tax-efficient than a limited company.

Limited Company

A limited company is a business structure that is registered at Companies House. It is a legal entity and is completely separate from its owners, meaning it is responsible for its own finances and debts, so owners can benefit from less financial responsibility (limited liability).

Most companies are limited by shares and owned by shareholders. Companies are managed by one or more directors who may also be shareholders.

Limited companies must pay Corporation Tax on all taxable profits and submit tax returns each year, along with other statutory filing and reporting requirements under the Companies Act 2006.

Although there are a greater amount of administrative tasks, running a limited company is often more beneficial and tax-efficient for many businesses.

Advantages of a Limited Company

  • A distinct legal entity separate from its owners.
  • Limited liability, meaning members’ personal finances and assets are protected beyond what they agree to invest in the business.
  • Often viewed as larger and more established businesses, even if they are run by just one person.
  • More tax-efficient.
  • Directors are able to pay themselves a salary and dividends.
  • Limited by shares companies can sell shares in exchange for capital investment.

Disadvantages of a Limited Company

  • Must be incorporated at Companies House, though it doesn’t take long or cost much.
  • Must register with HMRC for Corporation Tax.
  • Can cost more to set up and operate.
  • It isn’t possible to register a limited company if you are an undischarged bankrupt or disqualified director.
  • Information about the company is on public record, including the registered address, service addresses, director details, shareholder details, filing history and financial activity.
  • Accounting and filing requirements are often more complicated and time consuming than sole trader admin.
  • You can’t remove money as and when you please as you must have enough profit left after the deduction of tax and other expenses before doing so and must follow strict procedures to remove money and pay yourself.

How To Register as a Limited Company

In order to register your company with Companies House, you will need to apply either online or via post.

Please note, it costs £12 to register online and £40 to register by post. Registering by post also takes between 8-10 days, so it’s always best to apply online where possible to save yourself time and money.

To do so, head over to the government company registration webpage and click ‘Register Now’.

Before filling out your application online, you should check the following:

Is Your Company Name Taken?

Make sure your proposed company name hasn’t already been taken by using the company name availability checker prior to submitting your application.

Ensure Your Company Name is Consistent

When filling out the application and supporting documentation, it is essential to use the same name for your company throughout.

Does Your Company Name Contain a ‘Sensitive’ Word?

There are a number of sensitive words and expressions which may require additional supporting documentation alongside your application to use.

These controls are in place to ensure a name doesn’t mislead or harm the public. For example, it may not be appropriate to use a certain word if it:

  • Suggests business pre-eminence, a status, specific function or names that include ‘British’. ‘Institute’ or ‘Tribunal’.
  • Implies a connection with the UK government, a developed administration or local/specific public authority.
  • Includes a word that represents a regulated activity.
  • Includes a word whose use could be an offense.

Is Your Memorandum of Association Correct?

Make sure that the right memorandum of association contains a printed name, signature and date and is with the incorporation document.

Have You Provided the Correct Nationality?

Only correctly spelled nationalities will be accepted. Do not include ethnicity.

Have You Used Your Full Name?

Ensure that you provide the full names of anyone listed on the application. Nicknames and initials will not be accepted.

Have You Entered Shareholders?

When entering shareholders, known as ‘subscribers’ to the company, make sure the subscribers are correct, with the right name and that the company isn’t subscribing to itself.

A subscriber (person or limited company) must have its own legal personality. If the subscriber is a corporate body, ensure you have evidence to confirm that the corporate body has a legal personality.

Exemptions of Public Details

A person or company, known as ‘officers’ are only able to claim exemption from disclosing some details to third parties under certain circumstances, such as being at risk of violence or intimidation.

Get Help from the Professionals

If you’re worried about meeting the correct requirements for registering your limited company with Companies House, it may be worth contacting our team of experts.

We can help you set up your new business from scratch, handling administrative tasks such as registering your limited company with Companies House or registering for self-assessment if you’re a sole trader.

Get in touch with our team today to find out more about how we can help you get started.

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