What Is Company Formation?
Company Formation, also known as Company Registration, is the process of registering your business with Companies House. Although the process involves more administration than running a business as a sole trader, there are legal benefits to registering a company in this way.
Once your company is registered with Companies House, it’s seen as its own legal entity, meaning that its finances, liabilities, contractual agreements, and property are separate from that of the owners. This separation of ownership provides the owners with legal protection in most cases should things go wrong within the business.
How are company owners protected?
Company owners are protected through Limited Liability.
Because the company is a separate legal entity, limited liability protects company shareholders, guarantors, and LLP members up to the amount that they invested in the company.
For example, if a shareholder has paid £1 for their shares, they are only held liable for £1 of the company’s debts, should the worst happen. Anything beyond this amount is the responsibility of the company and the company alone.
Limited liability is typically the main reason why business owners register as a company rather than self-employed. Without this legal definition, the business owner is personally responsible for the entire debt of the business.
Can I be the sole company owner?
When forming a company, you need to appoint a minimum of one director and one shareholder. However, both of these roles can be carried out by a single person.
Having a single person in both roles is typically the route taken by smaller businesses where the owner wishes to retain complete control over the business’s operations.
However, if you want to have more than one director or shareholder, this can be done either during or after registering the company. The number of appointments made depends on how you want the business to run in the long term.
What’s the process of registering a company?
Here at Company Wizard, we make the process simple. By using our online formation wizard, we take you through the process in easy-to-manage steps; then, we send your application to Companies House, where it can be approved in as little as three hours.
What do I need to form a company?
When completing your application, you need to provide the following:
- Your unique company name (if you’re unsure whether your chosen name is unique, use our free company name checker)
- A registered address that’s in England and Wales, Scotland, or Northern Ireland
- One director (minimum)
- One shareholder or guarantor (minimum)
- Memorandum and articles of association
- Share capital or at least one share
- Up to four Standard Industrial Classification (SIC) codes that outline what your company will be doing
- Information about your Persons With Significant Control (PSCs)
How much does it cost to form a company?
Here at Company Wizard, it can cost as little as £57.99 to register your company with Companies House.
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When can I start trading as my new company?
Assuming Companies House has accepted your application, you can start trading as soon as you receive your confirmation email from Companies House (typically within 3-6 working hours).
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