Registering an LTD in the UK is one of the most popular and profitable ways of doing business. This jurisdiction offers many advantages, which also attracts many foreign entrepreneurs. If you want to open a business in the UK and are considering private limited company advantages and disadvantages, this article is for you.
Why Is It Worth Registering an LTD In The UK?
LTD is one of the most popular forms of doing business in the UK. The founders and directors of such a company are not personally liable for its debts and obligations. In this way, they protect their personal property from business risks. This advantage is obvious, but not the only one. Let's take a closer look at the advantages for registering a private limited company.
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Trust in your company.
The UK business environment has rightfully earned a high level of business reputation and prestige. Information about beneficiaries, shareholders, and directors is publicly available, which indicates the openness and transparency of the system. If you own an LTD in the UK, foreign counterparties will have a high level of trust in your company, and they will be more willing to make transactions.
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Tax benefits.
The UK income tax rate for companies with income up to £50,000 ($63,345.75) is 19%, which is lower than in many other countries. In addition, there is no repatriation tax when withdrawing dividends to your country of residence (if you are outside the UK).
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Possibility of attracting investments.
What does LTD mean in the context of funding sources and investments? In the United Kingdom, these are:
● bank loans (for example, to expand production, purchase new equipment, or finance working capital);
● government programs in the format of tax breaks, loans, and grants (Enterprise Finance Guarantee, Small Business Research Initiative, and Innovate UK);
● private investment;
● crowdfunding.
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Protection of intellectual property and confidentiality.
The UK has a strong system of legal protection for copyrights, patents, trademarks, and other forms of intellectual property. You can also register nominee directors and shareholders to hide the real owners of the company from public access.
LTD Registration Procedure In The UK
To register an LTD in the UK, you need at least one director and one shareholder, who may be the same person. Let's take a closer look at how to open an LTD in England:
● Selecting and checking the name of the company, which must be unique and not similar to the names of other companies registered in the UK.
● Determination of authorized capital. The authorized capital is the minimum amount that must be contributed to the company upon registration.
● Selecting a company address. LTD must have its registered office in the UK. This may be the address of the physical office of the company or the address of the registrar of companies. In the UK this factor is strictly checked.
● Preparation of the charter, distribution of rights, and responsibilities of shareholders and directors.
● Preparation of documents and their submission to Companies House (the government body that registers companies in the UK).
Requirements For Founders When Registering an LTD Company in The UK
To open an LTD in England, the founder must be over 16 years old. The founder cannot become bankrupt, and only an individual can be appointed director of the company. In this case, it is necessary to set the authorized capital amount to at least 1 pound ($1.23). Besides:
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The founder can be either an individual or a legal entity. He does not have to be a UK citizen and may be a resident of any country.
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The founder must provide his personal data: date of birth, full name, nationality, residential address, and postal address.
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The founder is required to indicate his share in the authorized capital of the company and his role in the management of the company (director, secretary, shareholder).
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The founder must sign a declaration of consent to be the founder of the company and abide by its charter and rules.
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The founder pays the state fee for registering the company.
What Documents Are Required During Business Registration?
Once you have found out what ltd is in the UK and decided to choose this format, it’s time to sort out the preparation of documents. To register LTD in the UK, you must provide the following documents:
● an application for registration of a company, which indicates the name, address, type of activity of the company, the number of shareholders and directors, as well as the size of the authorized capital of the company;
● documents confirming the identity of all shareholders and directors of the company;
● a document confirming the physical address of the founder;
● three facts to choose from about the founders, directors, and shareholders: mother's maiden name, year of birth, national insurance number, father's name, passport number, or telephone number.
Since 2016, when registering a company in the UK, information about the beneficial owners and the number of shares in their possession must be indicated. Controlling persons are individuals who actually own or control a firm.
Information about controlling persons must be provided to Companies House within 14 days after company registration.
LTD Registration Deadlines In The UK
After submitting registration documents to Companies House, registration of English companies is carried out within 24 hours to 10 working days. The speed largely depends on the registration method - online or offline. A registered agent can significantly speed up the process.
Once a company has received its registration certificate, it will have three months to register for corporation tax in the United Kingdom.
Final Thoughts
Opening an LTD in the UK is a complex and multi-stage process that requires careful preparation and compliance with all necessary requirements. The advantages of running a private limited company in the UK overshadow the hassle associated with the preparatory process. We recommend contacting The Hoxton Mix if you need a legal address to start a business. The company offers several advantageous packages for clients, including services for receiving and forwarding mail.