According to the Office for National Statistics company registration numbers for the latter part of 2020 ‘soared’ when compared to 2019 figures. And it’s no surprise. Lockdown has seen a significant chunk of the UK’s workforce either confined to homeworking, put on furlough or made redundant.
While some have spent their newly found freetime binging on the latest Netflix series or carefully cultivating an Animal Crossing archipelago (no judgement here!), others have decided to take a stab at entrepreneurship. Turning that long gestating business idea into an actual business.
All over the UK, people are transforming their hobbies into a business; Amateur bakers have started selling sourdough from their front door, PRs have launched beauty subscription boxes, city workers have opened online boutiques. The list goes on.
So what do you do if you’ve decided to turn that hobby into a side-hustle and hopefully a bustling business? How do you actually register a company? Well, here’s how.
The business structure
First up, you need to decide on the business structure that you want to move forward with. The UK offers up a number of different models for the aspiring business owner, with the two most popular being sole traders and limited companies.
For the purposes of this blog post we’re going to look at registering a limited company. This type of company is perfect for startups as it offers financial protection to its owners, amongst other benefits. If however, you do wish to start up as a sole trader, take a look here.
Setting up a UK limited company (limited by shares)
Choose your company registration route
All UK limited companies have to be set up through Companies House, the UK’s registrar of companies. While forming your company directly with Companies House is an option, you should consider using a company formation agent (such as ourselves) who, as well as being able to offer cost-effective online formations, can also offer extras that Companies House can’t, for example:
- Introduction to appropriate partners including banks such as Barclays, TSB and Tide (often with a cashback reward), domain name providers, accountants and more
- Assistance with filing duties such as annual accounts and the confirmation statement
- Address services that help you protect your company from the public register (when you register a company certain information becomes publicly available)
The company registration process for a UK limited company (the information you need to register a UK company limited by shares)
Decide on your company registration package
We offer a number of formation packages designed to cater for your specific requirements, starting from £13.99 and going up to £99.99. We recommend that you take the time to look at the company registration options available to you as, while upgrading your package is an option post-formation, it’s not the most cost-effective course of action.
Key considerations should be:
- Are you comfortable with taking care of the confirmation statement (a compulsory filing obligation with Companies House) yourself?
- Are you prepared to have your private address appearing on the public register?
- Are you going to need a printed copy of the Certificate of Incorporation?
- Are you going to register for VAT?
Take a look at our UK company registration packages, all of which are completely online and will get you started as a limited company in as little as 3 working hours.
Pick a unique name for your UK limited company
Companies House do not allow duplicate names on the register, nor do they allow names that could be considered the ‘same as’ another name. For example, ‘My Company Limited’ would be considered the same as ‘My Company UK Limited’ or ‘My Company’s Limited’.
Also, Companies House has a list of ‘sensitive’ words and expressions. These are words/expressions that can’t be used without written permission accompanying your company registration. For example, words such as ‘Association’. ‘Nursing and ‘Royal’.
See Companies House company names, rules and restrictions for a full list of these words and expressions as well as more information on the ‘same as’ regulations.
Finally, it’s worth noting that because you are registering a UK limited company, your company name must end with the suffix ‘Limited’ or ‘Ltd’. When completing the incorporation you will be given a choice between these two, however, this is not set in stone – you can switch between them if you wish.
Selecting the registered office address
This is the official address for your new company and where governing bodies such as HMRC and Companies House will send correspondence. The address must be based in the UK but you need not conduct any actual trading from this address.
The registered office address is on the online public register, meaning anyone can freely search for it online. So, while using a residential address as the registered office is allowed (you’ll need permission if you are not the property owner), it is not recommended as having your address searchable online increases your risk of identity fraud and could even bring you unexpected visitors
To solve this issue we offer a company registration package that allows you to use our 20-22 Wenlock Road, N1 7GU address as your company’s registered office and director service address (more info on this in the ‘Director appointment section’ of this article). Perfect for shielding your private address from the public register as well giving your business a prestigious UK base to impress potential customers.
Find out more: Register a Limited Company with our Privacy Package
The right SIC Code/s
The Standard Industrial Classification (SIC) Code is a 5 digit long code that sets out the industry that your company will be operating in. And they do get a little on the niche side… for example, ‘01110’ is the code for ‘Growing of cereals (except rice), leguminous crops and oil seeds’, while ‘28302’ is the one for you if you’ll be ‘Manufacturing agricultural and forestry machinery other than tractors’.
When registering your company you will need to select at least one SIC code (you can choose up to four) but don’t worry if you’re not certain on the exact industry that you’ll be operating in, you can always update your code/s at a later date.
The necessary appointments in your UK limited company
A company can be registered in the UK with just one person acting as the:
Director – the person/people who run the company
Shareholder – the person/people who own the company
Person with Significant Control (PSC) – the person/people who ultimately have control over the company (a recent addition to the list of required appointments introduced to increase transparency in limited companies)
As well as starting and running a company with just one person, you can have multiple people taking up each of the above roles. It is also possible for another company to be appointed in any of the roles, as long as there is at least one person acting as a director.
To make a Director/PSC appointment you will need to provide the following information for each person:
- Date of birth
- Residential address – not placed on the public register
- Director Service Address/Correspondence address – is on the public register. To keep your residential address from being published and searchable online, we recommend setting up your limited company using the Privacy package that enables you to use our Wenlock Road address as your Service Address.
As well as the above, we have a legal obligation to check Proof of ID and Proof of Address documents for directors and PSCs (as do all company formation agents). This is to comply with ‘Anti-Money Laundering’ (AML) and ‘Know Your Customer’ (KYC) regulations.
To ensure your company formation experience is as simple as possible we have partnered with Jumio, the world’s leading AML compliance specialist.
All you need is a camera phone, passport (or driving license) and proof of residential address document. It’s 100% online and the quickest and safest way to verify your ID.
See this dedicated article for more information on providing the necessary ID documentation.
To make a Shareholder appointment you will need to provide the following information for each person:
- Service address/Correspondence address – is on the public register (to shield your address see here for more information on our Privacy company formation package)
- Class of shares held*
- Number of shares held*
- Value of shares held*
- First 3 letters of their town of birth
- Last 3 digits of their phone number
- First 3 letters of mother’s maiden name
*The information given here is used to ascertain the share capital of the company. This in turn defines the ownership of the company. For initial setup we recommend keeping it simple by allocating 1 share worth £1 to each shareholder. If there are multiple shareholders with differing levels of ownership, again, allocate as low an amount as possible while still demonstrating the share split.
The memorandum and articles of association
These are the documents that outline how your limited company will be run. Like Companies House, we use a generic set of memorandum and articles of association that suit the majority of new business owners and their companies. You are free to create and upload your own version of these documents but we do recommend that you seek the advice of a business professional for assistance in doing so.
That’s it. All the information that you need to register your side-hustle as an official UK limited company and turn your passion into profit. We do hope that you have found this blog post helpful. See here for a full list of our limited company registration packages and more information on the company formation process. Best of luck and please do get in touch if you have any questions!