Establishing a business in the United Kingdom is well-known to be one of the best choices for international investors. According to the recent independent reputable overview, the UK is the #1 country in the list of the best jurisdictions for business.
The most beneficial option for doing business in the UK steadily remains a limited liability company. This is a flexible vehicle that possesses lots of credibility instantly from the moment of its incorporation. In this article, we will review in detail this option for doing business in the UK, including the UK LTD cost in 2024.
What Is the LTD?
The abbreviation “LTD” stands for “limited”. This body corporate is legally separated from its shareholders whose liabilities over the results of the LTD’s operation don’t exceed the amount of funds invested in the company. However, the LTD itself may have two variations.
Types of LTDs
The LTD may be private, which is most common, and public. In both cases, the liabilities of the shareholders are limited exclusively to the amount of funds invested in the company. Let’s review each of them in detail.
The first variation, the private limited company, perfectly suits small businesses where investors join their funds and possess shares, but are not allowed to offer such to the general public. This is a sort of closed club between the business partners where business relations are based very much on trust.
The second variation, the public limited company, is more suitable for large businesses that are aimed at involving extra funds from outside. For this purpose, the public LTD is entitled to offer its shares to the general public. Most typically, this is made through the stock exchange. However, in order to do so, the public limited company has to comply with the larger set of compliance and reporting standards.
If you are not sure what type of entity is most suitable for your business project, do not hesitate to contact professional consultants on this matter. Get your personalized advice.
How Much Does It Cost to Register the UK LTD?
In 2024, the LTD UK price is formally declared by the Companies House – this is the state body authorized to register the companies and make the information about them publicly available – at the level of £50. There are also some financial nuances to take into consideration.
The requirements regarding the amount of the share capital of the UK LTD in a private form are absent. Still, the public LTD has to have a minimal statutory capital in the amount of £50,000, 25% of which has to be paid at the moment of the registration.
However, actually, the amount of the share capital should correspond to the types of activities that the entity is going to carry out. If you are not sure about the amount of statutory capital that would suffice, consult with the professional advisors.
In addition, opening a bank account will be required to make a business operable. This endeavor is associated with minor fees as well, starting from £10, depending on the chosen bank. Arranging insurance may be also necessary. The associated fees also vary but are not astronomical. You may contact professional advisors to get more details on this matter too.
PROs & CONs of Establishing the UK LTD
If you opt for the UK LTD. The solution has both advantages and disadvantages. Here are they:
| PROs | CONs |
| Professional status – once the LTD is registered, its title is protected, nobody else can use it. | Information about your company is publicly available – any LTD has to be registered and some of the information about it is disclosed to the general public. The Companies House makes this to ensure the overall transparency of doing business in the UK which is good yet is associated with sacrificing some portion of privacy. |
| Reputation – founding a legal person in the UK and doing your business from this location sometimes automatically adds credibility to a business. | Changes must be reported – since there is a public record about the company, it should keep the information about it up-to-date. Thus, the Companies House should be informed about all of such changes instantly. This is the case when it comes to updating the information about directors and the amount of statutory capital. |
| Separate legal entity – the LTD is entirely distinguished from its shareholders. | Split of ownership and powers – unless you are a single shareholder, you should coordinate your business decisions with other business partners. |
| Reduced financial liability compared to a sole trader – shareholders are not liable for the debts and the overall results of the LTD’s operation. Typically, external managers are hired. | Accounting – LTD has a bit different and stricter requirements for accounting and reporting. |
| Tax implications – sole traders may pay taxes at the rates from 20 to 45% while LTDs pay it at the rate of 25%. Certain tax incentives are available as well, depending on the industry. | |
| Easy to open a bank account in the local bank – while it may be very challenging to open a bank account for a foreign resident, it is much easier for the registered UK LTD in good standing. |
Bottom Line
The UK is obviously the best choice to start a business, the most convenient way of doing so is establishing the LTD. Private LTD is the most suitable option to start a business in the UK without huge financial resources.
It is flexible, is not associated with astronomic costs, and is also effective in terms of taxation. Having the LTD in such a reputable jurisdiction as the UK automatically adds credibility to any business. Contact professional consultants to find out more about how it can benefit your business plans. Get your personalized advice and streamline your business in the UK!
