Frequently Asked Questions & Answers
Have you thought about what you will need to be an operational business?
Setting up a Company is just the start. This just makes you compliant with the law in terms of commercial activity.
How will you manage income you could generate – You will need a Business Bank Account for that. Most believe that this is easily accessible from the High Street. That once was the case but not so after the 2007 financial crisis. The High Street banks now require far more than ever and Credit Checks are far deeper than before. Unless you have a clean record, the chances are that these will be beyond your reach.
How will you accept payment from your customers once you get started – Gone are the days when we all used cash. If you cannot take bank/credit card payments, you have just closed off over half your potential income. Card payment facilities were never easily accessible to small business, let alone start up businesses and currently are even harder to access now, just like Business Bank Accounts.
How will potential customers find you – The business world is huge and just having a good product or services is no longer a guarantee for success.
What makes a business?
A business needs to be commercial viable, that is it must be able to sustain itself and those who work for it. It must be able to generate repeat business, whether from new or previous customers.
To generate income, the business needs to be able to track whether it is making profits (more in than is paid out). The company should be visible (able to be found). Being found requires physically in the form of a bricks and motor location, paper media adverts (flyiers, newspaper adverts); online via a webstore, online website or web advertising. Nor a combination of all some or all of these. The business should have an identity (like a person, it should have something that is identifiable solely to that business – a logo or graphic image). The business should be able to accept payment and store that payment safely (bank account, cash and electronic money collection ability)
In short – If noone know you exist, how will they know what you do or where to find you
As we have outlined in our introduction on who we are, we are the only Company formations provider offering a One-Stop Shop solution.
Imagine these situations:
- You want to or have setup a Company but your Credit Rating gets in the way of a High Street Business account. How do you go about running you business and getting paid?
- Your business is already active, with a bank account but you find that most of your potential customers payment option of choice is a bank card, but your Credit rating is not good enough to get a High street card facility?
- You are starting out in business but your business has nothing about it to make it memorable in potential customers minds. How do they remember who you are if they like what you do but want to access your services at a later time, not there and then?
- A potential customer somewhere in your locality is looking for services or products you offer, which are probably better than your competitors. How do they find you if you do not have an online presence? They may be right next door and not know you exist, so what do you think will happen with that potential customer? They become your competitors customer because he is who they find and NOT
View our Formations and addon Standalone Packages. We cover everything in one place to take you from just a Company to being an Operational Business.
We have been where you are RIGHT now – What do we mean?
By this we mean, we began just like you – an idea in someone’s head and NO idea about how we make that idea a commercial reality. We have no doubt that like most new prospective business startup’s, you are full of questions on what yo need and why. Added to that, like us, most new entrepreneurs have little guidance as to where to find information, though now with the maturity of the internet it is getting easier. We were born out of trying to create a solution that would be of benefit to those in your position, create a business around it and here we are today to serve you.
What is a Company, what is a Business?
A company is the legal framework (Government legislated) that must be in place to to carry out a commercial activity. This can take several forms such as a Sole Trader (You in your personal capacity); Partnerships (Several individuals coming together to carry out a commercial activity); Limited company (legal entity set up to carry out commercial activity owned by one or more individuals through paid up shares). Once you have set up one of these structures, you have a “Company” but you do not have a business.
A Business is the Commercial activity. It is customer facing and builds a reputation, through which an income can be created. To most they are one and the same thing, but in actuality they are different. A business requires particular items to make it viable.
How much does it cost to form a limited company?
The government filing fee to register a limited company is £12 (directly with Companies House).
Registered company formation agents (like us) receive a discount and pay £10 to file an application to register a limited company. There is no VAT on Companies House filing fees. Our company formation packages include the government filing fee and are cheaper than forming a company directly with the government. When you form a limited company the government only issue you with a Certificate of Incorporation. You are expected to put the rest of your legal documents in place yourself to make the company compliant with the Companies Act. We can provide these documents for you and do additional registrations such as VAT, PAYE and domain names at the same time as your company is being formed so that you can get your company up and running as quickly as possible.
Who can be a company director in the UK?
Basically anyone can carry out a UK company formation and become a company director unless they have been specifically banned from doing so (usually as a result of bankruptcy or legal proceedings). There is an age limit to form a limited company. You have to be 16 years of age or older (Section 157 Companies Act 2006). Although in practical terms it is extremely difficult to do things like open a bank account for your company until you are 18.
You only need one person to form a limited company. According to Section 154 of the Companies Act 2006 – A company limited by shares requires at least one (human) director but there may be more and it is possible for a limited company to be director of another limited company, as long as there is at least one human being who is already a director. There is no longer a requirement to have a company secretary (Section 270 The Companies Act 2006) but you may choose to do so if you wish. The final requirement is that you have, or can provide, a UK address to register to company to (this is something we can help with).
Who should act as the company secretary?
Since Section 270 of the Companies Act 2006 came into force there is no legal requirement to have a company secretary but many limited companies still choose to have one. Anybody can act as the Company Secretary of a private limited company. A person may consent to act as both the Company Secretary and be a Director of the same limited company.
How long does it take to get a company registration number?
Company numbers can only be generated when Companies House are open. Their hours are 9 am, to 5 pm, Monday to Friday. If you order a company outside of these hours we will submit it first thing on the next working morning. Assuming you place your order during normal business hours we will check over the details you have submitted to make sure there are no obvious issues (e.g. a sensitive word in the name). We then submit your company formation directly into the Companies House systems. From that point it typically takes 3 to 5 hours to get your company number back.
What are the memorandum and articles of association?
The memorandum and articles of association are legal documents that set out:
- The Company Name
- The Registered Office location and
- The internal constitution of the company
You will probably be asked for this document when you open a bank account for your company. All our companies are incorporated using standard ‘general commercial company’ memorandum and articles. These are written in a way that is designed to enable your company to carry out any business activity and to minimise the administrative requirements on the company. Our company formation service includes the drafting of these essential company documents to ensure proper registration with Companies House.
Is there any paperwork to fill out?
Using our online company formation service means there is no paperwork to fill out and sign. Instead you fill out a few simple online forms and we do the rest. Alongside a UK registered office address for the company and a residential address for the company director(s) we need 3 bits of person information. They are:
- Mother’s maiden name
- Town of birth
- Eye colour
If you are using our Registered Office Service we may ask for additional ID such as scanned copies of passports or driving licenses.
Can I choose any name for my company?
Yes, you can choose any name you like as long as it is not already registered, ‘same as’ or ‘too like’ an existing company name or likely to cause offence. Some words in company names are however restricted or forbidden, these are called ‘sensitive words’. Due to changes made in the Companies Act 2006 words added to company names that might once have been sufficient to differentiate them from an already registered name and thus make them registerable are no longer deemed as such. These include words like ‘services’ and ‘UK’. You can register a name which includes sensitive words as long as it is approved by the secretary of state. For more information on sensitive words and guidance on choosing a company name, please see the relevant pages on our site. Our company name change page might also be relevant.
Remember that you must include the word “limited” or the letters “Ltd” as part of your company name when carrying out a company formation. To cover yourself fully, you should also check that your name, or part of your name has not been registered as a Trademark by somebody else.
How should I allocate shares in my company?
By law there must be at least one shareholder who subscribes to take at least one share. If you wish to take an equal amount of shares with another member of the company then it is usual to take one share each. Authorised share capital has now been abolished by The Companies Act 2006, so allocation of shares is now carried out slightly differently. If you choose the amount of shares to be issued by the company then the following are examples of how to distribute the shares.
- Mr Snow wants to own 100% of the issued shares in Company X Limited. Mr Snow would take 1 share or whatever the total number is issued (if 100 were issued, he will take 100)
- Mr Snow and Miss Golden want to own 50% each of the issued shares of Company X Limited. Mr Snow will take 1 share, Miss Golden will take 1 share (if 100 shares were issued, they would have 50 each).
- Mr Snow wants to own 80% and Miss Golden 20% of the issued shares of Company X Limited. Mr Snow will take 8 shares, Miss Golden will take 2 shares (if 100 shares were issued it would be 80 and 20 respectively).
If you require advice regarding the shareholding for your limited company please contact our sales team.
What is the registered office?
The registered office must be an address in England and Wales, or Scotland where legal documents can be served on your company. This address is kept on the Companies House database and is available for anybody to inspect free of charge. This address must also be written on all your company correspondence such as letterheads and invoices. It is quite common to use a director or company secretary’s home address as the registered office address.
Pheonix offers a Registered Office address service if you wish to keep your home details separate from your company details. There is a small annual fee for this service that includes forwarding up to 10 items of statutory and legal mail each year.
What is a director’s service address?
In an effort to protect director’s personal details, the Companies Act 2006 introduced a ‘service address’ for directors. Directors will now have a service address and their residential address. Only the service address will be made public. The residential address is viewable by public authorities and credit agencies, but no one else. This allows some protection for the director. It is possible to use the companies registered office address as the director’s service address.
Do I need to reside in the UK to be a director?
No, you do not need to be a UK individual to be a director of a limited company.
Can a director be an additional company?
A corporate body or organisation can be a director of another organisation, however, it can’t be the main executive – there must be no less than one other director who is a “characteristic” individual.
Does a director need to be an investor in the business?
Directors are not needed to claim any shares in the organisation they run, yet they are allowed to. Additionally, a shareholder is not needed to be an executive of a business; however they are permitted to be.
What are the major obligations of a director?
Directors are accountable for running a business legally and also attempting to make it effective. They need to comply with business regulations, choose for the firm’s advantage, keep documents, and documents precise accounts and also return on schedule.
Can I designate a new director for the formation of a company?
Shareholders can add another executive to a company whenever after arrangement. This should be possible using the web through our administrator portal (for nothing out of pocket) and the data is sent to Companies House for regard.
Can I expel a director from my firm?
A director could be expelled from a business by a bulk ballot from the investors, or invalidated by a court or controlling physical body. If the regards to the director’s written agreement or an investors’ Business Secretary.