Company formation and marketing basics 18.02.2014

ROYAL HOLLOWAY ENTERPRISE ACADEMY

Company Formation and Marketing Basics

18.02.2014


What kind of business form should I take?


Overview• Have to chose a structure• Structure defines your legal

responsibilities– Paperwork– Taxes– How you get paid– Personal responsibilities


Types of business• Most UK businesses are– Sole traders– Business partnerships– Limited companies

• Other legal structures exist for social enterprises– Charity– Community Interest Companies (or CICs)


Sole Trader

• Individuals running their own business• Keep all profits after tax• Can take on staff


Sole Trader Responsibilities• Personal responsibility for:–any losses your business makes–bills for things you buy for your

business, like stock or equipment–keeping records of your

business’ sales and spending


Registering as a sole trader• Must register with HMRC as soon as you can

after starting your business• Legal stuff:– Make a Self-Assessment tax return each

year– Income Tax on profits and pay National

Insurance– Register for VAT if you expect your

business’ revenue to be more than £79,000 a year


'Ordinary' business partnerships

• You and your partners ‘share’ responsibility

• You get a share of the profits• Personally responsible for bills

and losses• A ‘partner’ can be another

business


Setting up a partnership• Choose a ‘nominated partner’• Register partnership with HMRC• Each partner must register as an

individual with HMRC– Personal tax return– Pay income tax on partnership’s profits

and individual National Insurance


Advantages of non-incorporation

• Simpler for taxation purposes – no legal need to keep accounts (though advised)

• Don’t have to publically issue your accounts

• Can withdraw cash from the business without any tax effect

• Claim capital allowances, e.g. mobile phone bill, running a car, etc.


Private Limited Companies• Appoint directors and register with

Companies House– Certificate of Incorporation– Legal entity in its own right– Liability is limited to its members• Limited by shares• Limited by guarantee


Limited by sharesThe liability of each member is limited to the original value of the shares issued to them•A shareholder has 500 shares originally valued at £1 each. •They have previously paid for 100 shares, ie £100. •At the time the company fails, they’re liable up to the original value of shares they haven’t paid for, i.e. £400.


Limited by guarantee• Members of the company financially

back it up to an amount agreed previously, if things go wrong.


Before you register• the company’s name and registered

address• at least one director• at least one shareholder• details of the company’s shares - known

as ‘memorandum of association’• rules about how the company is run -

known as ‘articles of association’


How to register• online - but only if the company is

limited by shares and uses model articles of association– £15

• by post - you must do this if you change the model articles or use your own– £40

• using an agent


Company name• Must end in either ‘Limited’ or ‘Ltd’• The name can’t:

– be the same as any other name on the Companies House index of names

– contain a ‘sensitive’ word or expression unless you get permission

– suggest a connection with government or local authorities– be offensive

• You may have a trading name which is not the same as your company name


Shareholders• Statement of capital– the number of shares the company has and

their total value– names and addresses of all shareholders

• Every limited company must have at least one shareholder

• Shareholders are owners of the company and they have certain rights


Corporation Tax• Within 3 months you must tell HMRC

about your new business• You will need to set a filing date, and

will be given a date when your company must pay Corporation Tax.

Company formation and marketing basics 18.02.2014

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