Company Formations: everything you need to know

You've developed an excellent business concept and written a rock-solid business plan... However, what is the following stage in the process of launching a business? At this step, many people choose to incorporate a limited liability company.

What is the meaning of company formation?

Company formation is the process of registering your business with Companies House as a limited company. This process is not free. When a company is registered, it becomes a distinct legal entity, thus if it goes bankrupt, the owners are not personally accountable for any of the company's liability claims in excess of the amounts invested in shares or guaranteed.

To form a company, you will require a new UK business bank account. You cannot operate a company using a personal bank account. Your business is a separate legal entity and requires a business bank account in its name.

What are the elements that form a company?

1. A company name

If you want to set up a private limited company for the first time, you must choose a name for your business. You should consider using a unique name different from other registered businesses, it is advisable to use an entirely new, simple and easy name.

Since everything is now digital, a free online search will help you check if your new name is free for using.

2. A registered office address

All limited liability companies must provide information about their registered office. This is the company's official address. The address must be in the country of the company’s formation. This address receives official government mail from Companies House, HMRC, and other government organizations. Company documents should be maintained there. It might be either a residential or a commercial address.

3. A company director

At the very least, your company must have one director. Directors are legally accountable for the day-to-day operations of the company and for accountancy. If you choose to have a team of directors, each must provide a service address. Directors are not required to reside in the UK.

4. A shareholder

This is your company's owner, who may or may not be the same person as your company's director. This means that you only need one individual during formation of a company, yet you may have a team of shareholders if you like.

5. A memorandum and articles of association

The memorandum and articles of association are the company's founding documents. There is, however, no need to be concerned about obtaining these documents: Companies House will prepare and attach the memorandum as part of the company registration procedure, along with the articles – which your company formation agent will give as part of their service.

6. Share capital of at least one issued share

Company shares are fractional ownership interests in a company limited by shares, each of which represents a proportion of the company.

When a private limited company is incorporated at Companies House, it must issue one or more shares.

7. A Standard Industrial Classification SIC (code)

This is a one-of-a-kind sequence of five integers that denotes a certain economic activity. When a new company is registered with Companies House, at least one SIC code must be used to identify the nature of the business's trade.

Ordering your new company online

If you require help to set up a business, you can contact company formations agents. They offer great support and a comprehensive choice of business formation packages that can run for months or a year and are set to meet the most business demands. Additionally, they may provide an 'order by telephone service' if you are unsure about forming a company online on your own.

Different formation agents offer different packages to support you in making timely decisions as to which type of registration services is easy or simple to use.

Due to Formations agents' simple online process, you may choose your company name, formation package, make payment, and finish your company information within 10 to 15 minutes time.

The agent will then check your company formation application and forward it to Companies House, where it will be processed within a day. You will receive an email notification as soon as your company registration application is approved.

Your confirmation email will include digital copies of your share certificates, a certificate of incorporation, and the memorandum and articles of association, if applicable. These documents are available for download and printing at any time.

If your company formation package contains paper incorporation documents, your formation agent may send these to you within one to two days.

How many people are required to form a limited company?

While a minimum of one director and one member is required, it is perfectly possible for one person to fill both positions to form a company on their own. Alternatively, you can appoint several directors and members both during and after the formation of the company.

Is it possible to form a UK company as a non-UK resident?

Almost anyone, regardless of where they live, can set up a private limited company if all legal requirements are completed. Due to the accessibility of online company formation services, incorporating a business from anywhere in the world is simple and easy.

Application forms can be completed online in a time of minutes, electronically submitted to Companies House, and accepted in less than a half-day. Your new company's registration documents are emailed to you in digital (PDF) format, and it is then ready to trade. There is no requirement to be in the UK.