How to form a company in London?

Learn how to form a business in London step by step, comprising selecting a company name, shareholders, directors, registration office, and other details.

If you want to start a business in the United Kingdom, you'll be in excellent company. A company is a separate legal entity. By forming your organisation in one of the world's premier business destinations and the leading destination for international investment in Europe, you will be ideally poised to capitalise on the opportunities that a big global business centre affords.

What is the definition of a business?

A firm is a legal entity with its own legal identity, distinct from people who control or manage it on a daily basis.

However, there are many forms of corporations, such as public limited companies and private companies limited by guarantee, the private company limited by shares is by far the most prevalent and popular commercial entity in London. In most circumstances, this is the business entity you will most likely want to use when taking the following steps in the growth and formalisation of your firm. As a result, any reference to a "company" afterwards will relate to a private business limited by shares.

What is the purpose of forming a company in the UK?

Although alternative business types exist, such as operating as a sole proprietor or creating a partnership, the fundamental reason you should choose to form a company is that the obligations of the company's owners and directors are separate from those of the limited company. As a result, your individual exposure to the company's creditors and lawsuit against the company is restricted.

Forming a corporation may also have additional benefits, such as making it simpler to obtain capital and formalising ownership and voting arrangements among people participating in the firm. Another administrative and legal advantage of founding a limited company is that the legal and regulatory framework overseeing the functioning of the business is largely addressed in a specific place: the Companies Act 2006 ("Companies Act").

How to Form a Company in the UK?

A company is formed by submitting a set of paperwork with the Registrar of Companies at Companies House (part of the Department for Business, Innovation, and Skills), in line with the Companies Act, the fundamental bit of legislation regulating company law. When a company's certificate of incorporation is received, it formally becomes a legal entity.

The following papers must be lodged with Companies House:

• Form IN01 (which needs the provision of fundamental information about the limited company such as the business name, founding directors and company secretary, and shareholders of the firm);

• Association Memorandum; and

• Articles of incorporation

Company Name

When considering starting a corporation, one of the first things to keep in mind is the name you want to use. However, prior you make a definitive selection, there are a few options that must be checked in order for your name option to be denied by the Registrar of Companies:

• A private company's name must conclude with the term "Limited";

• No two English corporations can have a similar (or extremely similar-sounding) name (you can check this on the Companies House website). and

• A company name must not include any sensitive or derogatory terms.

• When selecting a name for your firm, keep in mind that if the name of your company is too close to another property, you may be in violation of trademark law.

One Shareholders or more, and share capital

One of the benefits of forming a company would be that it helps you to legalise your organisation's business model. This is accomplished through shareholdings.

A business must have at least one shareholder (also known as a "member") who owns at least one share worth at least £0.01. There are no limitations on the number of shareholders, shares, or denominations of shares subject to this minimal criterion.

At least one Director (sole director) or more

The board of directors, which consists of those individuals who govern a company on a daily basis, is among the most essential aspects of any organisation. When forming a corporation, you must decide who will serve as the firm's original directors. The following aspects should be kept in mind when doing so:

• Typically, the least number of directors needed to form a business is two.

• There is no maximum limit of directors that can be appointed, yet it may be cumbersome for a small firm to have a high number of directors participating in managerial decisions.

• An independent director has to be at least 16 years of age.

In the case of directors, there are no citizenship or residency restrictions under English law.

Registered Addresses (registered office)

You will also be needed to declare the planned registration address of the firm as part of the company formation process. A registered office in England or Wales is required for a UK corporation. This is the address where legal procedures and other official papers will be served. It does not have to be the main, or even any, location where your firm conducts business (though in fact, it typically is).

Constitutional company documents (legal document)

The Memorandum of Association and Articles of Association are the two essential constitutional papers that corporations must have when they are formed under the Companies Act.

Conclusion

I hope this post has helped you grasp all you need to learn regarding starting a company in London. Need some help? Take a quick glance at our company formation package for more information. If you are interested in exploring more relevant topics, you can our posts on corporation tax registration, sole trader, limited liability partnership, and more.