By Rachel Craig, Rapid Formations
There is no requirement to live in the UK to set up a business here. Non residents are eligible to register and manage a UK limited company as long as they can satisfy the following three conditions:
- Are at least 16 years old.
- Are not going through the process of bankruptcy.
- Have not been disqualified from company directorship.
The registration process can be carried out online, which means there is no need to travel to the UK to sign documents. You simply need to decide which type of company you want to set up, choose which part of the UK you wish to register, provide the necessary details on the application form and submit it electronically to the UK registrar, Companies House.
Applications can be made via Companies House’ website or through a company formation agency. The majority of incorporations are approved within a couple of working hours (UTC/GMT). Companies are ready to trade immediately thereafter.
Limited by shares or limited by guarantee company?
Your first decision you will need to make is whether you want to set up your company as limited by shares or limited by guarantee. This is usually a simple decision based upon the planned distribution of trading profits.
The limited by shares structure should be used if you will be running a commercial business and keeping the profits for yourself. This is the most popular type of company because most people set up a business to generate personal income. Profit distribution is based on the shares held by each shareholder.
The limited by guarantee structure should be used if you want to set up a not-for-profit organisation or charity. Due to the fact there are no shares or shareholders in the limit by guarantee structure, trading income is normally reinvested in the business to further its non-profit aims.
The decision really is as simple as that, though you can use limited by guarantee company for a profit-making business if you don’t want to issue shares. This is unusual, but it is allowed.
Choosing a UK jurisdiction.
Companies House is responsible for approving incorporations in all UK jurisdictions, of which there are three: England and Wales, Scotland, and Northern Ireland. You must choose one jurisdiction when you make an application. This is where your company will be officially registered, so you will be required to maintain a registered office in the same jurisdiction.
Your chosen jurisdiction has no bearing on where you can base your trading operations. It simply dictates the location of your official company contact address, so you can set up business premises anywhere you like, including outside the UK.
Most company formation agents provide suitable address services with mail forwarding that can be bought during the application process and renewed on an annual basis.
Completing an application.
All UK company incorporations must be submitted to Companies House. Applications can be made online through the registrar’s Web Incorporation Service, but most people prefer to use the services of a specialist company formation agent. There are many benefits to choosing this latter option over Companies House:
- Costs are comparable with (and sometimes cheaper than) the Companies House fee.
- Both company types can be registered through an agent, but Companies House only accepts limited by shares applications through their Web Incorporation Service.
- The online application form is more straightforward.
- Most incorporations are approved within 1-3 working hours of submission.
- Agents provide assistance and guidance during and after the registration process.
- Agents provide registered office and business addresses, in addition to many other useful services.
- A full set of incorporation documents are provided, including share certificates and articles of association.
- Companies can be registered with multiple types of shares.
- Articles of association (required governing document) can be altered and submitted through an agent.
A minimum of one director and one shareholder (or guarantor for limited by guarantee companies) are required when setting up a private limited company in the UK. One person can take on both of these roles, so you may set up a company by yourself. You can also appoint multiple directors and shareholders/guarantors during and after incorporation.
When you are ready to register a limited company, you will be asked to enter the following details on the online registration form:
- Company name, ending in ‘Limited’ or ‘Ltd’.
- Registered office address.
- Director’s details – name, home address, date of birth, nationality and official contact (‘service’) address.
- Shareholder’s (or guarantor’s) details – name and contact address.
- Number of shares you want to issue (limited by shares company only).
- Agreement to adopt ‘Model’ articles from Companies House – if you do not wish to adopt this standard version, you must state this fact and attach your own tailored articles.
All of this information will be made available to the public on the Companies House register. The only details that will remain private are the day part of the director’s date of birth and his/her home address. However, home address details will be made public if provided as the registered office or service address.
If your application is approved by Companies House, you will be notified immediately by email and you will receive copies of your incorporation documents in digital format. You can start trading through your company as soon as this happens. You will also receive correspondence at your registered office address from Her Majesty’s Revenue and Customs (HMRC) to explain your company’s reporting requirements for tax.
Whilst setting up a UK company is an incredibly easy process, it’s a little more complicated to manage as a non-resident due to the different tax and statutory compliance systems. Before making an application, please consult an accountant or specialist advisor who has knowledge of the UK company formation industry and tax system.
Rachel Craig is the senior content writer and editor for Rapid Formations Limited, the UK’s #1 company formation agency. An expert in her field, Rachel provides in-depth guidance and advice on UK company registration, corporate compliance and starting a new business.