Setting up a company in the United Kingdom

The United Kingdom is one of the recognized business and cultural centers of the modern world. Therefore, it is prestigious to open a business in England. Such a company, as a rule, commands the respect of partners and is trusted by suppliers. Additional advantage of this jurisdiction is the quick process of setting up a company. England is open for foreign investment, which makes it popular for setting up companies among foreign entrepreneurs.

The UK law provides flexible conditions for the registration of companies, especially LLP and LTD. High economic stability, conservatism, investment security and the world's most developed banking system attract many investors wishing to set up a company in England and use the mechanisms of avoidance of double taxation. The country cannot be called a classical low-tax zone in the traditional sense, but this does not make the registration of companies in England less popular. These types of companies are appropriate for IT services, travel agencies, consulting companies, translation bureaus, etc. For some types of activities, it is mandatory to obtain a license. Without a license, it is not possible to do business in the hotel, banking, insurance, brokering and medical sectors.

Before setting up a company in the UK, it is necessary to decide which type of company best suits your needs.

TYPES OF COMPANIES

In England there are several corporate forms of company registration:

• Private Limited Company (LTD);
• LLP (Limited Liability Partnership);
• Company limited by guarantee;
• Unlimited company (UNLTD);
• LP (Partnership established in England or Wales).

Based on the experience there are two of the most popular legal forms for setting up a company in England:

• Limited Liability Partnership (LLP) the equivalent of a limited partnership;
• Private Limited Company (LTD) a private limited company.

Let's look at the advantages and features of both.

PRIVATE LIMITED COMPANY (LTD)

Most private companies registered in the UK are LTD companies. Private Limited Company has the status of a UK resident and is subject to taxation in this country by the general rules. The company must submit annual reports to the tax authorities. Private Limited Company has no minimum share capital and has no restrictions (within the current legislation) on the areas of commercial activity. The only exceptions are those areas of business, which require special permits.

KEY REQUIREMENTS FOR LTD REGISTRATIONS:

• At least one director (may not be a resident of the UK);
• At least one shareholder (may not be a resident of the UK);
• Shareholder and director can be the same person;
• Secretary is not required;
• Registered address is required;
• Annual meeting of shareholders (possible remotely);
• Accounting, financial statements, and tax returns are mandatory.

LIMITED LIABILITY PARTNERSHIP (LLP)

LLP is a hybrid form of business entity that combines elements of a limited liability company and a simple partnership. Partners are not personally liable for the company's debts. There are no shareholders in this structure, as there are no shares, nor does it have a Memorandum and Articles of Association. Partners act in accordance with the contract. Such a company does not pay corporate tax, but as well as LTD, submits all reports. Tax is paid by partners as individuals in their countries of residence. Financial reports (4 for LTD and 3 for LLP) are submitted once a year.

KEY REQUIREMENTS FOR LLP REGISTRATIONS:

• At least two partners;
• Directors and secretaries are not required;
• Management responsibilities are shared between the partners at their discretion;
• Each founder is legally liable for debts only to the extent of his share in the capital.

TAX RATES FOR LLP AND LTD

*VAT number is required if the company’s turnover for the last 12 months was over £85,000.

REPORTS AND AUDITS

LTD and LLP companies file and submit financial reports to the Register and the Tax Office. All companies registered in the UK are given a tax number without exception. After the registration of the company a letter from the tax office with the tax number is sent to the legal address. The Annual Reports are filed once a year electronically. The data of directors for LTD and LLP is publicly available in the UK Registry.

COMPANY’S BANK ACCOUNT

Nowadays, opening a bank account for a company that has no physical office in the country is almost impossible. A better and faster option for businesses whose shareholder and/or director are non UK residents is to open an account in the payment system, which is essentially an analogue of the traditional bank account.

Our company has extensive experience in opening accounts with both traditional banks and payment systems, and that's why we can assist you in solving these issues.

WHAT IS A COMPANY REGISTRATION FEE IN ENGLAND?

The price of a company in the UK depends on many factors and will vary from case to case. To find out the total price of the company please feel free to contact us.

WHAT ISSUES MAY ARISE DURING THE REGISTRATION PROCESS

Setting up a company in England is not an easy process, especially for those who are engaged in such a procedure for the first time. There are many legal subtleties that will have to be considered. Problems may arise at the very first stage - choosing a name. Checking its uniqueness is the responsibility of the business owner. Complications sometimes arise at the stage of paperwork as well. To assemble the application package, fill out the owner's form and translate the documents into English, you need to consider many nuances known only to qualified professionals.

We have extensive experience in the procedure of setting up a company, opening bank accounts in any country and in the other ambitious regulatory questions. Our qualified advisors will provide professional assistance in setting up a company and explain the advantages and disadvantages of different types of activities. Similarly, we can help with the purchase and sale of existing companies.

Both LLPs and LTD are well-known and commonly used in the UK models. In comparing them, it is important to consider what is most suitable for a particular business, its required structure and the nature of its operations. Full compliance and tax advice should be obtained before deciding on the most appropriate legal structure. You don't know what to choose, give us a call, describe what your business idea is and we will advise you and help with everything.

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