3 Top Tips For Successfully Setting Up A Company
If you have a business idea that you think is worth exploring, your first port of call should be carrying out market research. As long as there is a market for your idea, you’re all set to start putting your plans into motion. One of the first things you then need to consider is the type of business you’ll be running.
For more information about the different business types, check out our previous post: What are the different legal structures in business?
This post is designed to help you if you’ve chosen to set up a Limited Company but want to ensure you set it up correctly.
Tip 1 - How to choose your company name
While you might have your heart set on a name and want to start trading under it, it’s not that simple. You need to make sure no other company has the same name as you; you can do this by using our company name check tool. You can start registering your company if your chosen company name is available.
However, you need to consider additional rules for your company name; there is a full list of sensitive words and expressions on the Companies House website. These sensitive words cannot be used in a company name unless you meet certain regulations; for example, if you want your company name to be “Blue Fox Chartered Accountants”,you must submit evidence from your awarding body that you are a chartered accountant.
Also, while it might sound obvious, your company name shouldn’t offend anyone. There is no specific guidance surrounding what this means, but there are common sense understandings. For example, it’s taken to mean no swear words, no sexual connotations, and no religious affiliation. During the checks completed by Companies House, these will be picked up and may be allowed to be used at the discretion of Companies House. However, sometimes it’s best not to chance it; in 2021, the BBC reported that Companies House had rejected 800 potentially offensive company names in the past two years.
Once you’ve chosen your company name and know it’s available while not breaking any of the rules, you’re ready to start the registration process.
Tip 2 - Decide if the model Articles of Association are fit for you
Every limited company has a document in place called the Articles of Association. This document governs how the business is run and how decisions are made.
By default, when you register a limited company, the model Article of Association is adopted. However, this isn’t always fit for purpose within the business. When this happens, you can decide to abide by bespoke Articles of Association instead.
Below are some reasons why the model Articles of Association may not be fit for your business:
- There are no pre-emption rights, meaning a shareholder can transfer their shares to any other individual for any price, rather than offering them to existing shareholders in the same proportion to their current holding
- The process of removing a director can take time (28 days), whereas it may be more beneficial for the company for them to be removed faster.
- The model articles are unclear on what represents a majority vote; one article states that at least two directors need to be in favour for a vote to pass. However, another article states that a company can be run by a single director. This ambiguity can lead to grey areas.
Before deciding whether to adopt the model Articles of Association, make sure you understand them and the implications for your company.
Tip 3 - Find a company formation agent
Here at Company Wizard, we’re what’s known as a company formation agent. This means you provide us with the details, and we’ll register your company with Companies House.
Using a middleman in this way might seem counterintuitive, but in most cases, it’s cheaper and easier than going to Companies House directly. There are numerous formation agents out there; however, they’re not all created equal.
Most have different packages, different prices and different services. So find one that suits your needs and your budget.
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