How to Establish a Company in London

Establishing a company in London, which is part of the UK, involves several key steps, primarily centered around Companies House registration and adhering to HMRC (Her Majesty's Revenue and Customs) tax requirements. The process largely depends on the type of business structure you choose.

Key Steps to Establish a Company (Private Limited Company)

The most common structure for a new business is a Private Limited Company (LTD), which is a legal entity separate from its owners (offering limited liability). The steps to set this up are:

1. Choose a Company Name
   The name must be unique and not the same as an existing company's name. You must follow the rules for company names (e.g., no offensive language, no suggestion of government affiliation). You can check availability on the Companies House website.
2. Choose Your Structure and Documents
   Decide whether your company will be limited by shares (most common) or limited by guarantee. Prepare your governing documents: the Memorandum of Association and Articles of Association (these documents lay out how the company is run).
3. Appoint People with Significant Control
   Directors: You must appoint at least one director (who can also be a shareholder). Directors are responsible for running the company.
   Shareholders/Guarantors: You need at least one shareholder (for a company limited by shares) or one guarantor (for a company limited by guarantee).
   People with Significant Control (PSC): Identify individuals with more than 25% of the shares or voting rights.
4. Choose an Official Address
   Your company must have a registered office address in the UK (this will be on the public record). This can be a physical location or a service/virtual office address in London.
5. Register with Companies House
   You can register online, which is the quickest method and costs £50 (usually registered within 24 hours, but current processing times can vary).
   You will need to provide at least three pieces of personal information about yourself and your shareholders/guarantors (e.g., town of birth, mother's maiden name, passport number).
   You'll also need a Standard Industrial Classification of Economic Activities (SIC) code, which identifies what your company does.
   Upon successful registration, you'll receive a Certificate of Incorporation.
6. Register for Tax
   Corporation Tax: A limited company must register for Corporation Tax with HMRC within three months of starting to do business. You will need to create a Government Gateway account for your company.
   PAYE (Pay As You Earn): If you plan to employ staff (including yourself as a director taking a salary), you must register for PAYE to handle income tax and National Insurance.
   VAT (Value Added Tax): You only need to register for VAT if your annual turnover exceeds the threshold (£90,000 as of April 2024), although you can register voluntarily earlier.

Different Types of UK Business Entities

The best structure for your company depends on factors like liability, tax, and administrative burden: