As a small business owner, you might be wondering whether you need to register your company name and how you go about doing it. The good news is, if you decide to take the plunge, it’s actually a pretty straightforward process that can be done in a matter of days or even hours.
To help you make your mind up we’ve put together this comprehensive guide to everything you need to know about why and how to register a company name, so let’s get stuck in.
Why should I register my company name?
If your small business is currently a one-man-band, that makes you a sole trader. As a sole trader, you are under no obligation to register your company name but there are a handful of perks in doing so.
Remember: while you don’t have to register your company if you’re a sole trader you do need to register with HMRC to let them know they’ll be receiving a tax return from you each year.
The perks of being a registered company
- It gives you a more professional image - by registering your company it will become a ‘limited’ company, and it’s not uncommon for larger businesses to give limited companies preference over sole traders.
- You’ll pay less tax - owners of limited companies are subject to corporation tax which is currently set at 19% whereas sole traders pay personal tax rates of between 20-45% based on profits.
- It makes it easier to raise finance - borrowing money is easier as a limited company than for a sole trader.
- You’ll have limited liability - registering as a limited company makes your business a separate entity to you, giving you ‘limited liability’, and essentially what that means is you won’t be responsible for any financial loss incurred by your business.
- You can make pension contributions tax-free - you can make employee pension contributions before any tax is deducted since they qualify as a legitimate business expense.
- You’ll have the option of selling equity - limited companies are divided up into shares which gives you the option to sell shares in your business to raise funds.
- You’ll be future-proofing - when the time comes to retire, or if something ever happened to you, it’s much easier to hand over ownership of a limited company.
Do I have to do it?
The short answer is, no. But, if you decide not to register your company be aware that someone else, regardless of whether their intentions are malicious or not, could register a business with your name, which could have a negative impact on your credibility.
So by registering you could, in essence, be safeguarding the interests of your business.
How to register
Check your name
Before you get the process started you need to double-check the company name you’re hoping to register does not do any of the following:
- Include offensive language
- Include sensitive words or expressions
- Imply any government connection or official status (such as using the words British or Institute)
- Imply any association with official bodies or regulated sectors (i.e. banking, charity, etc.)
- Suggest a royal link (such as including the word ‘Windsor’).
Top tip: if you’re unsure you can double-check your company name is acceptable with Companies House here.
Once you know the name is acceptable, you need to check it isn’t being used by another company and you can do that via the company name availability checker.
Get all your ducks in a line
Before you go any further it’s a good idea to have all the supporting evidence you’ll need ready and this includes at least three pieces of personal information about you and any shareholders you have, such as:
- Passport number
- National Insurance number
- Mother’s maiden name
- Town of birth
- Father’s first name
- Telephone number
The next thing you’ll need to do is fill out the online application/questionnaire with Companies House. Here’s a rundown of what you can expect along with help on some of the more complex areas.
- You’ll be asked whether you’re starting a new company or taking over an existing one.
- You’ll be asked if any of the directors are already on the Companies House secure register.
- You’ll need to create a Government Gateway user ID.
- You’ll need to state whether the company is a Community Interest Company (CIC) - this is a special type of company which is set up to benefit the community rather than its shareholders.
- You’ll need to provide your company’s registered address - this information will be publically available so if you want to keep your home address private consider listing your accountant’s address.
- You’ll declare when the company will start trading.
- You must choose a SIC code for your business activity - A Standard Industrial Classification of Economic Activities (SIC) code is something you assign to your company to state what it actually does. You can have up to four per business, and find the range of available codes here.
- You’ll be asked to appoint a company director or directors - you must appoint at least one director who’ll take full responsibility for the running of the company including sending reports and accounts when necessary. They must be over 16 and you’ll need to provide their private address as well as an official one.
- You’ll be asked to declare whether your company has a ‘Person with Significant Control’ (PSC) - this is someone who has more than 25% of the company’s shares and voting rights, the power to appoint or remove directors and make decisions that affect the company.
- You must decide on your share structure - the majority of limited companies are owned by shareholders who receive a percentage of the profits but are also liable to pay a portion of any debts. For small businesses, it’s most common to have just one shareholder who owns 100% of the company.
- Finally, you’ll sign a statement of compliance - you need to confirm you’ve read and accept the Memorandum of Association relating to the rules of running a business and adhered to the requirements of the Companies Act relating to registration.
How much will it cost me?
It costs £12 to register online at Companies House and you can pay using a debit card, credit card or PayPal - you’ll be registered within 24 hours.
If you need to register with immediate effect you’ll need to do it before 3pm and will be charged an additional £100 fee.
Postal applications cost £40 and take 8-10 days.
For help accepting card payments once you’re up and running look no further. Here at takepayments, we make it easy with short 12-month contracts and personalised pricing packages to suit every business.
So, whether it’s a card machine, EPOS till system or online payment system you’re after, get in touch with our friendly experts on 08082 392658.