A detailed guide on how to register a business name
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Registering a business name is an important step when starting up a business. The business name is the first point of contact with the company, and it's essential that it's unique and representative of what the company does. Although registering a business name may initially seem daunting, you can simplify the process if you follow the right steps and procedures. In this article, we provide a guide to registering a business name and look at the types of businesses you can register.
How to register a business name
Starting a business requires planning, so you may be curious about how to register a business name appropriately. If you want to register the company as a limited liability company (LLC) or a limited liability partnership (LLP), it's a requirement that you register the company name with the registrar of companies, Companies House. The following is a list of the steps to take when registering:
1. Choose a company name
Your first step is to decide on a company name. It's important that you follow all the rules and regulations guiding the selection of a company name so that Companies House doesn't reject your submission. When choosing a company name, consider the following:
Make sure that the name you choose doesn't already appear on the Companies House register, as this would indicate that it belongs to another company. You can check this by utilising the Companies House free online checker.
Make sure that the business name is not too similar to a company name that is already registered. If it is similar, the other company has the right to request that you change the name.
There is one exception to the requirement to not use a name similar to another company. You can use a similar name if the company is part of the same group as the existing company or if you have written permission from the existing business to use a name similar to its own.
Do not include sensitive words and expressions in the company name, and be careful not to use words that suggest an affiliation with the government without permission. An example of this is the word 'accredited', which you can only use with permission from the Department for Business, Energy and Industrial Strategy.
Companies House has a list of sensitive words that you cannot include in the company name. So before you submit a business name for Companies House to consider, check that the words aren't on this list. If you want to include certain words in the business name, especially those linked to royalty (such as king or duke), you can apply for permission from the relevant authority. If you live in England or Northern Ireland, apply to the Ministry of Justice, and if you live in Scotland or Wales, apply to the government.
2. Decide on the company's address
Once you have selected a viable business name for the company, the next step is to choose the official address for it. This is where you're going to receive mail and notifications for the business, and it appears on the Companies House public listing. Some business owners use their home address as their official address, but this makes your home address public and may not be a good practice for security reasons. In place of your home address, you can make use of the accountant's address.
3. Choose an SIC code
SIC is short for Standard Industrial Classification (of economic activities). This code states the exact business that the company participates in. The SIC code is a five-digit code where the digits represent specific industries and their classifications. An example of a SIC code is 11050, with the first two digits indicating that it's a company that manufactures beverages and the final three digits indicating that the beverage is a beer. The company can have up to four SIC codes if it has different specialisations.
4. Appoint a company director
All registered companies require at least one director. This person is responsible for the running of the business and the preparation of reports and accounts. You can appoint yourself as the director of the company. But if you decide not to appoint yourself, it's a requirement that whoever you appoint is over 16 years of age. If you wish, you can also choose a secretary for the company at this stage.
You're required to provide two separate addresses for the director. One is an official business address and the other a residential address which isn't open to the public. If you have made yourself one of the directors and used your home address as the company address, you may supply an alternative residential address at this stage.
5. Outline a company share structure
Limited liability companies require a number of shares. A share represents a portion of the company, and shareholders are owners of the shares. This means that you own part of the company and have an entitlement to a proportion of the profits, depending on how many shares you own. It's also one of the prerequisites of the registration to specify the number of shares you want the company to have along with the class and price of each share.
You can have just one share or decide to have no upper limit on the number of shares the company can have. You can give the shares any value and assign the rights that the shareholders have. If you intend to be the sole owner of the company, you can choose to have a single share and assign a value of £1 to it. This gives you full control of the profits and operations of the business. You can change the number of shares later, along with the value and rights associated with them, when you begin to have shareholders.
6. Choose the shareholders and persons of significant control
Since shareholders own part of the company and have an entitlement to a percentage of the profits, they also have special voting rights in the company. A shareholder with 25% or more of the shares of the company qualifies to register as a person of significant control. You supply the details of shareholders and persons of significant control, including their name, date of birth, nationality, country of residence, service address, home address and the degree of control they have over the company.
7. Sign a statement of compliance
As registering a business name is a legal operation, it's paramount that you provide evidence of obedience to the rules and regulations that Companies House set. It's important that you provide details on how the company runs in a memorandum of association and articles of association. This step can take some time, so working on it as soon as possible is also essential.
8. Pay the company formation fee
Once you've finished the process of registering the business name with Companies House, you pay a fee. This fee is £12 if you make use of the online registration process. The fee for doing the registration by post is £40, and it can take up to 10 days to receive a response. You can speed up the registration process by choosing the same-day registration option for a fee of £100, but you can only do this if you complete your registration before 3 p.m.
Companies House approves or rejects the business name within 24 hours. If the business name gets approval, you can then register the company for corporate tax and open a business bank account.
Types of business categories
When creating your business, decide on the type you would like to start, which can help you determine the category to register. Here's a look at two types to consider:
Sole trader business
Although it is not a requirement that you register with Companies House as a sole trader business, it's essential that you register the business with Her Majesty's Revenue and Customs (HMRC) so that you can pay tax through the self-assessment system. You can decide to either trade using your own name or choose a company name abiding by the same rules for naming a limited liability company outlined above. You're prohibited from using 'limited', 'limited liability company', 'public limited company' or their respective acronyms in the business name with this type.
Registering a business partnership involves sharing the responsibilities of the business. The name has to follow the same rules as other businesses, including the use of sensitive words. You appoint a nominated partner to manage the taxes of the business who registers the partnership with the HMRC for self-assessment. It is a requirement that you include the names of all partners on any documentation relating to the partnership.
All the processes listed above for registering a limited liability company apply when registering a business partnership. If you have an existing company seeking to expand its operations into the UK, Companies House requires you to register it as an overseas company.
Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.
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