Starting any business involves a whole lot of moving pieces, some more exciting than others. Brainstorming ideas for a company name and logo? Fun! Tax, paperwork and registering with the government? Not so fun.
The legal structure of your business will determine what you need to do to register your business with the government, how you are taxed and what you are entitled to. Depending on your requirements, if you are thinking of setting up a company in the UK, you will be faced with the choice as to whether to set up a private limited company, a subsidiary company or an establishment (or branch).
A private limited company is the most popular type of company set up by sole traders. As the owner liability is limited to shares, your business finances are separate from your personal ones and are protected. Registering a new limited company must be done through Companies House, the regulatory body for the registration of all limited companies in the UK. It’s a fairly painless procedure that you or your accountant can do for you.
A subsidiary company is a company that is either owned or owned in part by another company. The advantages of setting up a subsidiary company are that as two separate legal entities, while the parent company can exercise control over a subsidiary, it is not liable for any losses made by the subsidiary. It also simplifies the process of dividing up your business should you wish to brand out into other countries where there is a different legal and financial system to the UK.
The alternative to opening a UK subsidiary is to set up a UK establishment or “branch”. A branch enables a company to conduct its business via local representatives in the UK. The place of business can be anywhere where the company regularly conducts business or otherwise a location through which the company can be contacted.
It is easy to become overwhelmed by the amount of available information out there. If you want to see more details on setting up your company, visit our step by step guide on Doing Business in the UK, designed to walk you through the basics of all you need to know. If you have any questions or would like to talk to us about setting up your business, get in touch, we’d be glad to help!