In 2024, 846,000 companies started in the UK. This is evidence of how the UK’s entrepreneurial spirit is so powerful.
If you want your business to succeed in the long run, you will need to close deals in the near term. Start it the right way.
By good planning, following local rules, and making good decisions, you will not make expensive mistakes and will build a solid foundation.
Here’s our company setup checklist of everything you need to know, from choosing a distinctive company name to learning about your tax obligations.
This guide will help you get up to speed with your company.
1. Pick a Business Name That Stands Out
This first impression is your company name. Your business’s good name refers back to what your business values and does.
List names that match your business style when you set up a company. Firstly, double-check that the name hasn’t already been taken by checking Companies House. Browse for names similar to it that could spoil a name.
Use words that are following the rules. Never pick government sounding or names that mislead you about what you actually do.
2. Choose Your Business Structure
Picking the right business structure impacts your taxes and personal liability. Here are the main options:
- Sole Trader: Easy to set up with little paperwork. However, your assets could be at risk if your business goes into debt since finances aren’t separate.
- Partnership: Lets multiple people share duties, skills, and profits. Partners share liability, too, so clear agreements are vital.
- Limited Company: Creates a separate legal entity that protects your assets and can save on taxes as you grow. Requires more paperwork and annual filings.
Choose based on your goals, risk comfort level, and funding needs.
3. Set Up Your Business Address
All UK companies must also have a registered office address open to the public. Your credibility and operational logistics depend on your address. Consider the following options:
- Residential Address: Your home may be cost-effective for your startup, but your address will be public.
- Virtual Office: If you’re a remote or home-based business, this option will give you a business address along with mail forwarding and call handling as additional services.
However, you cannot use a PO box as your registered office address. So, choose carefully which address is the best at this point and ready to grow in the future.
4. Choose Your Leaders and Owners
This means setting up clear governance by selecting directors, shareholders, etc. This is legal and allows for good decision-making.
- Directors: Appoint people, at least to the age of 16, who can run a business and are direct. They will be giving their details, handling strategic decisions, and such.
- Shareholders: Decide your ownership structure. You can have one shareholder or multiple ones to diversify the risk and benefit from other expertise.
Build trust with Investors and Regulators by documenting anyone who has significant control (usually those who own at least 25% of shares or voting rights).
5. Prepare Your Paperwork and Register
Before you can legally operate, you need to complete several key documents and registrations:
Foundational Documents:
- Memorandum of Association: A document signed by all initial shareholders confirming their intention to form the company
- Articles of Association: Rules governing your company’s management and defining the rights of directors and shareholders
Select Your SIC Code: Choose the Standard Industrial Classification code that best describes your business activities.
Register with Companies House: Most companies register online for around £12. Provide your company name, address, directors, shareholders, and SIC code. Once approved, you’ll receive your Certificate of Incorporation.
6. Know Your Tax Duties
Understanding your tax responsibilities helps you avoid penalties and optimize your finances. Being proactive about taxes saves money and keeps operations running smoothly.
- Corporation Tax: Register with HMRC within three months of starting to trade. Early understanding helps you plan for payments and make smart decisions about deductions.
- VAT Registration: Register for VAT if your taxable turnover exceeds £85,000 in 12 months. File returns regularly and keep accurate records to avoid fines.
- PAYE Registration: Register for PAYE if you employ staff to manage income tax and National Insurance. Understanding PAYE is useful even for sole traders who might hire help later.
Tax compliance prevents legal issues and gives you a clear view of your financial health.
7. Get Permits and Protection
Your industry needs come with specific licenses and insurance. These requirements will enable you to operate legally, protect your business and avoid prosecution.
- Local Government Restrictions: For instance, there are industries whose licenses you would need to trade depending on particular situations in a given area. Know the manner of application and renewal costs to sustain your business transition without unwanted surprises.
- Insurance: If you have employees, then employer’s liability insurance is compulsory. For instance, depending on what you do, think of public liability, professional indemnity or product liability insurance.
The valuable part of good insurance is that it protects your business from unexpected problems, cuts financial risk, and establishes customer trust.
Conclusion
Nothing about starting a company is complicated. Proceed step by step: select the suitable name, regulate yourself, and prepare the documents correctly. This is the basis of lasting success.
After all, our checklist provides you with a great structure, but it’s always worth getting advice for your particular case. Secure your business path and join the business community.