The Essential Guide to Incorporation in the United Kingdom (UK).

Now and again, you could be confused on where to set up your businesses or companies. This is because there are a lot of factors to consider such as the costs, tax payable, the requirements etc. But the UK stands out as the perfect destination for your business endeavors and strategic expansion, proving to be a key that unlocks enduring success. As the heartbeat of international commerce, the UK offers a robust legal framework that empowers entrepreneurs and businesses to thrive in a global market that is competitive in nature.

In this article, we will explore all you need to know about setting up your comapny in the United Kingdom, including the types of companies that can be incorporated, the benefits and disadvantages and otehr necessary information.

Types of companies that can be incorporated in the United Kingdom

1. Sole Trader: A sole trader runs their own business as an individual as opposed to a separate legal entity like a company. They are usually not required to pay corporation tax and they bear all the profit and losses that arise from the business. Sole traders have no shareholders or directors. It can be called a one-man business. As a sole trader, you are in full control of the business, overseeing its assets and benefitting from all profits after tax. A sole trader has unlimited liability, this simply means that if the business   becomes insolvent, then you are personally liable to creditors and must pay any damages yourself. Sole traders can be classified as small businesses that provide a service to individuals and families.
2. Public limited company: This is a company whose shares are traded publicly. Its operations are usually regulated, and they are required to publish periodic reports to shareholders on the financial health of the company.
3. Private limited company: This is the most common type of business incorporated in the UK. Under this, the company has a share capital.
4. Private Company Limited by guarantee: These are companies that don’t have a share capital. The members usually undertake to contribute an amount specified in the articles in the event of winding up. It is primarily used by non-profit organizations.
5. Limited Liability Partnerships: This type of company allows all the partners to have liabilities that are limited in nature. Unlike limited companies, an LLP does not pay corporation tax as it is not a taxable entity. Instead, the untaxed profits are distributed between members who are then taxed through the self-assessment tax returns.
6. Community Interest Companies: These are businesses that are set up that seek to be for the benefit of the community rather than the shareholders or members of the company. They can be private or public companies limited by shares or companies limited by guarantee

Advantages of setting up your company in the UK

1. Limited Liability: One of the main benefits is that the liability is limited. This is where the shareholders’ personal assets are protected from business debts.
2. Easy access to capital: The United Kingdom has a booming financial market and this makes it very seamless for businesses to access capital through loans and diverse kinds of investments.
3. Ease of doing business: The United Kingdom’s business environment is friendly with the company registration and compliance processes.The process for  setting up in the UK is digitalized, eliminating the manual, tedious and time-consuming aspects faced in other countries.
4. Protection of your business name by the United Kingdom law: Once your company is registered, others cannot trade under your registered company name or a similar name in the business sector.
5. Highly skilled Talent pool: The UK maintains a flexible market with regulations that safeguard employees. Rather than a hindrance, companies perceive these stringent regulations prioritizing employees as advantageous, as they clarify UK employment standards and enhance employees’ well-being. Labor costs in the UK are competitive in comparison to neighboring countries like France, Ireland, the Netherlands, and Germany. However, lower employer contributions to social security make hiring in the UK more cost-effective for employers, thereby improving their overall financial performance.

Disadvantages of setting up your company in the UK

1. A very huge disadvantage is the saturation of the markets. The Uk has some industries that are very competitive such as the finance and technology industries which makes it difficult for new entrants to get a strong foothold in such industries.

2. High Tax Rate: If your annual profit is lower than 50,000 pounds, corporation tax is usually 19%, if it is above 250,000 pounds, the company’s corporation tax would be 25% and if the annual profit is between 50,000 -250,000 pounds, then corporation tax would be 25%. This post covers more details on regulations in the UK

Fun facts about Incorporating in the United Kingdom.

1. There is no need for a Local Director: Countries like Cote d’ivoire, Cameroon and Kenya require that you have a local director before you can get set up.
2. You can get your incorporation documents between 24-72 hours as the case may be.
3. You don’t need to affix your signature on your incorporation documents. Certain information is usually asked for during the incorporation process and this is what is usually used as an electronic signature for each customer during the incorporation process.

Documents needed for the incorporation process.

1. The proposed name of your business;
2. The nature of your business: This just means a summary of what your company does
3. The registered office address:Norebase has a virtual address service and provides this to clients who do not have a UK address. 
4. Details of the directors and shareholders.

Norebase has incorporated several companies in the United Kingdom, who have referred us to other clients as a result of the smooth and seamless experience. To  join the list of happy clients, all you have to do is make the necessary payments, submit the required information, sit back, take a sip of wine and let us handle the incorporation process for you.