We recently held an #EllisonsLegalHour on Twitter. David Heller, solicitor within our Corporate Commercial department, answered some of your questions on setting up a company.
In case you missed it, here is a recap of the questions and David’s answers:
1. How do I set up a company?
Companies can be set-up, or “incorporated”, online via Companies House. Alternatively, you may choose to engage an incorporation agent to carry out the various formalities for you. If you require assistance with this process, Ellisons can help.
2. How long does it take?
Online applications are usually registered within 24 hours, whereas postal applications take 8 to 10 days. Companies House also offers a same day service.
3. How much does it cost?
Companies House charges a fee of 12 for online applications, 40 for paper applications and 100 for the same day service. If you choose to use an incorporation agent, there is likely to be an additional administration fee.
4. What information will I need?
You will need:
– a suitable company name;
– an address for the company;
– at least one director;
– details of the company’s shares (you will need at least one shareholder);
– shareholders to agree to create the company and its written rules (known as “memorandum and articles of association”); and
– details of people with significant control over your company, for example anyone with more than 25% shares or voting rights.
5. What does a director do?
A director is responsible for the day-to-day running of the company. Various duties are imposed on company directors under the Companies Act 2006, such as a general duty to act in the best interests of the company.
6. What is a shareholder?
Shareholders are the owners of a company. Although they are not involved in the day-to-day running, they are still required to vote on important decisions, such as whether to approve the changing of the company’s name.
7. Do directors and shareholders have to be different people?
No – it is common for someone to be both a director and a shareholder. It is, however, important to differentiate between their roles in each capacity.
8. Why should I set up a company?
One of the main advantages of running a business via a company is that it has a “separate legal personality” to those who are running it. This means that the company is able to enter into contracts in its own name, has separate finances from the personal ones of those running it and, crucially, the liability of its owners is limited.