Setting Up a Company – You Must Know All the Rules Right From the Start
If you are looking for setting up a company, you need to do lots of groundwork, starting from a survey. You cannot decide it overnight and start a business of your own. The very basic and necessary thing is to decide the type of business to start with. Businesses usually are of two types – manufacturing and service. Both these types of industries require different types of background, infrastructure, resources, and workforce. Once you have decided on the type of venture, the next thing is the location. The place and country you stay are also important consideration. The rules in granting licenses and authorities to people and corporation differ from countries to countries.
The hottest and the most preferred country for setting up a company is the United Kingdom. In the recent years, the UK government has streamlined the industrial and trading rules, thereby providing several benefits to people interested in business. The support and infrastructure provided by this country is excellent. Once you have a UK incorporation certificate, the business will achieve enough creditability to convince clients. However, the basic rule is that you must hold a UK citizenship in order to do the business. Even offshore companies have better chances of to set up their business here due to simplicity and ease in operating the venture. There are governing agencies like Companies House and other private sectors that help in quick and easy formation of business.
There are three business structures you can choose from in UK. They are Sole trader, limited company, and partnership. The first type of structure is for those who want to work for them or as ‘self-employed.’ By registering as a sole trader, you can embark on your venture. In case you are planning to set up a limited company in UK, you need to register the business office and must have at least one director.
If you want to go the easiest way in doing business, then registering as a sole trader would be better for you. In this structure, you are the owner alone of your business, and are free to employ people for running your business. Registration for ‘self-assessment’ tax is necessary. This means either you or your accountant is responsible in calculating your own tax.
How You Can Become a Sole Trader?
To you are setting up a company as a sole trader business in UK, you need to have a National Insurance Number (NI). Then, you need to register for self-assessment with Her Majesty Revenue and Customs (HMRC). You are also allowed to pick a business name or run the business on your name itself.
As a sole trader, you are the single owner of all the earning you make from the business. However, you have to calculate your profit after paying the tax on the income. You alone would be responsible for your business debts, keep valid and genuine bills for all expenses incurred. For example, tools and equipment, office rent (if any), travelling and food expenses, etc. Then, keeping record of sales and expenses is also compulsory. You have to submit Self-Assessment Tax Return every year to avoid violation of the prevailing tax rules. Lastly, you have to pay income tax and National Insurance on the profit in your business.
When it comes to naming your business, you have to follow certain naming conventions. You are not allowed to use ‘Limited,’ ‘Ltd,’ ‘Public Limited Company,’ ‘PLC,’ ‘LLP,’ or ‘Limited Liability Partnership.’
Any objectionable words, names of government firms, national heroes, etc. must be avoided. In case you do not want to mess around the paperwork of setting up a company, you can take help of an Umbrella company service.