Entrepreneurial flair, a unique idea or business concept can provide the solid foundations for a successful business.
With recent news filtering out from the Office for National Statistics confirming that the UK experienced economic growth of 0.5% for the third quarter of 2015, with increased output in the services and production sectors; it’s surprising to note that the incorporation of Companies took a steady decline in August 2015.
A total number of 44,136 company incorporations were registered at Companies House within the month of August 2015 compared to the 52,646 registered in June 2015. However, it is important to note that the current total of incorporated companies has reached 3,571,105 in the UK.
What should I consider when incorporating a Company?
Private company limited by shares
- A private ‘Limited’ or ‘Ltd’ Company will be considered as a separate legal entity.
- A Limited Company will have a minimum of one director and one shareholder; this can be the same individual.
- The liability of the members of the Limited Company shall be limited to their own shareholdings.
- A limited company will be governed by the Articles and Memorandum of Association, it is essential that the members of a limited company receive advice on these documents when setting up the Company. A Limited Company with bespoke and tailored Articles of Association will help ensure the members understand the constitution of the Company.
- A limited company will often have advantageous tax benefits for the shareholders of the company.
- A limited company can be set up within a matter of hours and be trading on the same day.
Private company limited by guarantee
- A company limited by guarantee is a non-profit legal entity with no share capital.
- As no shares are issued by the company, a company limited by guarantee is not owned by its members and cannot be transferred by its members for a value.
- This type of company is suitable for clubs, membership organisations and sports associations.
Public limited company
- A public limited company ‘Plc’ will often begin its legal entity as a privately owned company.
- A company will become a Plc when it either becomes listed on the London Stock Exchange ‘LSE’ or the Alternative Investments Market ‘AIM’.
- The key characteristic of a Plc is the ability to offer shares of the Company to the general public.
- A Plc must have a minimum issued capital of £50,000 of which £12,500 are fully paid up prior to a Certificate for Commencement of Trading is issued.
Limited liability partnership
- A limited liability partnership ‘LLP’ limits the liability of the partners whilst maintaining the tax status of a partnership.
- It is often considered suitable for an existing partnership to enter into limited liability status.
- It is essential for the partners of a partnership to enter into a Partnership Agreement, as unlike a limited company a partnership does not have any articles of association.
- An LLP will be considered a separate legal entity and will be responsible for its assets and liabilities.
By Nathan Bentley, Company and Commercial solicitor at Ison Harrison Solicitors