“Company Formation” is the process of registering a business as a limited company. After this process the business becomes a legal entity of the eye of law. Due to this reason the company has become completely separated from its owner in terms of finance, liabilities, contractual agreements and the ownership of property and assets. But the law does not notice unincorporated business, like Sole Traders as legal distinct entity. Hence, when any one operates as a sole trader, there is no separation between owner and the business in terms of finance or liabilities because sole trader is an individual that runs the business and looks after the business as per his choice and he is legally responsible for all aspects of the business.

The main reason behind the registration of a limited company is to limit the financial liabilities of the persons who own the business and this protection as the “Limited Liability”. All private companies are either limited by shares or limited by guarantee. But their personal finances and assets are protected beyond the limit of their responsibilities. The owners of any company who are limited by shares are those who only liable for the value of their shares. The owners of any company who are limited by guarantee are those who only liable for the value of their guarantee. But this case does not valid for the unincorporated business, like sole traders because a sole trader has unlimited liabilities because he is the only one who looks after the business. Therefore, they have to be responsible for all the business debts.

Apart from the benefits of the personal finance protection, limited company formation helps us to establish a professional corporate image and this helps the owners of the business to manage their personal wage in a very tax-efficient manner. Above all, the limited status provides a trustworthy business status. As a result, clients, investors, lenders or suppliers loves to deal with the business with a limited business one.

One thing we have to do for the formation of limited company is to register with “Companies House”. Companies House is the registrar of the companies in United Kingdom. Due to this reason, all United Kingdom limited companies as well as many overseas companies having a place of business in the United Kingdom are required to register with this government agency. The Companies House plays some roles and they are:

1.It incorporates and dissolves limited companies.

2.It receives all the information from all registered limited companies that are in the United Kingdom.

3.It ensures that all the corporate information of the incorporated companies is available for the public.

The Companies House operates only in three separate jurisdictions and each of the jurisdiction is given out by different registrar. One is in England and Wales (Cardiff Registrar), second one is in Scotland (Edinburgh Registrar) and the third one is in Northern Ireland (Belfast Registrar). Though a company can only be registered in one of those above countries but it can be operated in all parts of the United Kingdom as well as overseas.

Company formation is very simple and all the processes are done through online and all applications are finished and then they are sent to Companies House electronically and the approval for the formation of company is generally taken not more than three hours. Basically, we need only one person for registering and running the company and this person will become the guarantor or the shareholder.

For registering a private company that is limited by shares or guarantee we all require the followings stated below:

1.First we need a unique name.

2. Then we need a registered office in England and Wales or Scotland or in Ireland.

3. We need one director

4. we need one guarantor or shareholder

5. Share capital at least need one issued share

6.we need four Standard Industrial Codes (SIC) to describe what the business is about.

Whenever the company formation is rejected by the Companies House, this is because of small error which can be solved easily. Whenever we submit an online application through a company formation agent, we will be checked the missing information then and there. We can then check the error and we can resubmit the application online on the same day without giving extra charges. This facility serves as one of the best benefits of registering via a company formation agent.

There are so many reasons for rejecting the company formation application, such as company name is not available or the owner unable to show the original documents or the company name contains an offended word, company share structure is incorrect or may be the registered office address is wrong and it is situated in different country, the statement which entails the information about the share is incomplete or maybe it is missing. However, all these mistakes can be corrected and all we have to do is take the sufficient time whenever we are doing the application process and we also must have to check the availability of our company name before submitting our application.

A question may rise in our mind about which documents should we have required in order to register a company. Well, it is totally depending on us whether we choose the company formation agent or Companies House for registering our company. If we choose to form a company online through an approved agency, then we do not have to show the paperwork or any physical documentation because the process is totally carried out through online. But if we want to use the registration service of Companies House then we must have to complete the form IN01 and it takes 2-10 days in between which is quite extensive and also, we have to deliver it via online or by post as per our choice and we may also have to show some genuine documents that depends upon the medium we use whether it is via online or via post.

As soon as our company formation is done, we can start trading through our limited company.