Do you have any private cleaning company setup ideas? Stuck with how to get started in the UK? Unaware of the cleaning business requirements, business registration process, company setup, licenses, and so on? If so, you reached the right place. It makes perfect sense to invest your time reading the blog if you are one of the following business people. Let’s dive in!
- Taking a step ahead from a self-employed individual, you are willing to create a business and employ others.
- You want to build the brand, protect your company name, and gain large projects from B2B customers.
- Looking to lure in private investment with an entrepreneurial spirit.
- Want to save tax and ensure high profits being a sole trader.
- Planning to sell the business in the future when the business gets an optimal customer base.
Finally, you found yourself as one of those aforementioned personalities. You want to move ahead. So, what do you need? Here is the checklist of things you require.
- You need a minimum of one shareholder and one director that can be the same person.
- Find out a company name that adheres to all the government regulations.
- You must have a registered office in the UK. The home address is also acceptable.
- Follow all the Memorandum and Articles of Association, which are accessible through Gov. UK.
It’s pretty clear what you exactly need to set up the private cleaning company. The next step is to identify where you register the business and the euros you need to spend for company registration. Here is the way:
You can complete the business registration with Companies House in the following ways-
- You can register the business using the online application for £12, which takes around 24 hours.
- You can register the business using the paper application for £8, which consumes 8-10 days.
- You can register the business using the paper application for £100 if you need registration the same day.
- You can hire a formation agent who helps you with business registration for £30-£100, including the registered and director’s service addresses. He needs 24 hours to get the work done.
- You can hire an accountant, but it’s a costly option. Less often, it’s available for free when you sign up as a customer but consumes nearly ten days.
It’s not enough. You need to register the company with VAT when your turnover is over £85,000, with PAYE when you plan for having employees, and HM Revenue & Customs for corporation tax. What’s more? You don’t need to spend a single penny on all these registrations.
Is the private limited company registration necessary? What is the right time to get the company registered? The answer to all your queries.
Before you begin trading, the private company must be registered. In the case- you are a sole trader; you can start trading without completing the business registration process. But you should inform the same legal body HMRC before business activity beginning. When the registration process gets completed, the trading company turns into a limited company.
So, tempted to start ahead with the business registration process? Take a look at the registration process in a step-by-step manner.
Select your company name
The rules you should follow before you decide the company’s name:
- The company’s name should not be offensive.
- The name should not match with another company’s trademark or name. you can check it in the following ways-
- Directly search the name on the Companies House website, wherein you will find the list of all the UK’s registered businesses.
- Want to operate the business cross-borders? You should prefer Google search for the verification.
- You will find various trademark classes on the intellectual property office website for every industry vertical. You can do a trademark search on the website in the class related to your industry.
- The name should not include a word or expression that signals the company’s connection with government bodies. The list of all such words or expressions uploaded to the Gov.UK website for cross-verification.
- The company’s name should end with either Ltd or Limited.
- The name must be easy to read and remember.
- Don’t move ahead with local names if you plan to do business internationally.
- Don’t name the company after yourself if you plan to sell it in the future.
- Naming the company with letters- A or B helps in getting the business listed at the top.
- You can get the company’s name changed anytime from Company House online for £8.
- Having a company’s website is the minimal expectation of your customers. Prefer buying a domain name that matches the website name.
- The name should not match with another company’s trademark or name. you can check it in the following ways-
Select registered office and directors´ service address
The company’s official address is regarded as a registered office address by HMRC and Companies House, where all the emails are sent. The address is shown on all the company’s documents, including- brochures, invoices, websites, emails, and others. The inspection is done by HMRC and other legal bodies at the same address. So, you should keep all the company’s files and accounts there. The registered office address must be in the UK, and PO Box not considered. For a registered office address, you should consider the following things that are:
- You are allowed to change the registered office address name, but you cannot change the countries. For instance, if your company is registered in Wales, then the registered office address must be in Wales.
- If your home address is on the public register, you can register a private cleaning company at your home address. If you want to keep the registered office address private, then consider using third-party addresses. Many company formulation agents and accountants can help you with this.
- If you are looking to build a cleaning company that deals with corporates, manufacturing companies, and other giants, you must create a professional image for a registered office address.
The director service address is a trading address or registered office address, which is required when the director is appointed. The director’s residential address, which is already on the public register can also be used as a correspondence address if the director doesn’t have any problem in making it publicly available.
The trading address is where most business activities are carried out, and different stakeholders such as banks, customers, or suppliers send letters.
Choose the directors and shareholders
The private cleaning company set up requires at least one shareholder and one director, which can be the same person. The shareholders are the company owners in parts. There is no limitation on the number of shareholders and the person who acts as a shareholder. The shareholders don’t work unless they are working as directors as well. They reserve the right to vote on company matters, appoint/dismiss the directors, and receive profits according to ownership percentage. In the event, shareholders acquired over 25% shares of the company, they are listed as People with Significant Control.
Directors are liable to run the company that can be anyone- aged 16+ years and no legal action is registered against them or even bankrupted. They act as office holders for tax and insurance purposes and receive a trivial amount in return. What’s more? The directors also have an employment contract with the private company.
Share capital is referred to as the value of a company’s shares issued to the shareholder, not the company’s value. We can say it’s the liability of a shareholder to pay the specific amount when the company dissolves. For instance, if you are the only shareholder of the company and issued 1000 shares with a value of each share of £50, then at the time of business failure, you have to pay £50,000 towards the liabilities of the company.
Select company’s SIC code
A SIC code abbreviated as a standard industrial classification code is a five-digit code that needs to provide during the company registration process for specifying the business activity. You can create a maximum of 4 SIC codes that are changed anytime. Besides, to remove duplication issues, you can check the list of all the SIC codes that are available on the Companies House website.
Memorandum and Articles of Association is a must-have
The private limited companies essentially have a Memorandum and Articles of Association due to legal reasons. The documents are filed on Companies House and kept on a public register.
A Memorandum Of Association is a legal statement, include- the company’s name, shareholders’ name, and their online signatures, which are signed by the shareholders agreeing to company formulation. The Companies House provides many templates that make the Memorandum of Association creation a breeze.
Articles of Association include the rules for director appointment, new share issuance, board meetings execution, and more that helps in the company constitution. The model articles were adopted in different ways such as embracing model articles without attaching physical copy; embracing model articles with a physical copy of amendments; attaching copies of bespoke articles. However, the companies prefer adopting the model article provided by Companies House. Irrespective of the three model articles you prefer complying with the Companies Act 2006 is compulsory.
Verify the license requirement
Every company is unique in itself. The UK government has provided flexibility to some types of businesses in terms of no compulsion for license requirement for trading. How will you find whether your business requires the license or not? Don’t worry. The GOV.UK tool- license finder helps in knowing whether your business needs a license, and if yes, then whom should you contact for the application.
- Figure out insurance requirements
Various types of insurance are available that helps you know what type of insurance you need. Here’s the brief:
- Employer’s liability insurance covers the compensation claims raised from employees while working for the company. This is compulsory to buy the employer’s liability insurance policy from the authorized insurer for at least £5 million after you become an employer. Else, you are subjected to a heavy penalty of £2500 every day.
- Professional indemnity insurance protects the company against legal costs and compensation payments that are due. For instance, if the customer takes legal action against the company for making a mistake, then legal cover helps the company to overcome such costs.
- Public liability insurance is not mandatory by the UK government. It’s preferred because it protects the company against legal costs or compensation payments when the public sues the company for any reason. Private cleaning companies prefer such insurance policies due to direct contact with customers.
Identify the laws and regulations
Different types of laws are enacted by the UK government that applies to all types of businesses, while some apply to specific businesses. For instance, the Product labeling law – Gov.UK, Data Protection Act 2018 – Legislation.gov.uk, or GDPR applies to all the businesses operating in the UK. It’s better to consider legal professionals to know the laws and regulations applicable to your business.
Finally, start with company registration
The government has provided various ways to get the private limited company registered that are:
- You can buy an online application through Companies House for £12. It’s available to companies accepting model articles and limited by shares. The process takes around a day to complete.
- You can use the postal application for registration using form IN01 at a £40 fee. The process takes 8-10 days, but if the registration is required the same day, then £100 is charged.
- You can hire an authorized company formation agent that includes a registered office address and director’s address and facilitate bank account opening. They take around £30-£100 to complete the process in 24 hours.
- You can also consider hiring an accountant option, but it’s expensive as opposed to another alternative.
After application submission, Companies House notifies your company that the application is accepted or not. If yes, then you can download the incorporation document form. Later, the directors get a letter for appointment confirmation and a reminder for duties. One more letter from HMRC is sent for UTR number generation and instructions for corporation tax registration.
- It’s time to open a company’s bank account
If the director and shareholders are UK residents, then you are fortunate enough to get the bank account opened easily. You can open the account via traditional high street banks, mobile banks, or banking apps. Opening the business account with high street banks is free initially for the first 18 months, and then it’s chargeable afterward for £6 per month. The alternative mobile banks and banking apps are great options, but they offer limited services.
For non-UK residents, opening a bank account is a daunting task. Even UK banks don’t allow non-residential to open an account because of money laundering fears. In this case, 50% of the shareholders and directors are UK residents, then Metro bank, Barclays, and Tide banking facilitate business bank account opening.
- CIS registration
If your business had a plan to work in the construction industry, then registering for a construction industry scheme- is essential. The unique tax reference number is also important for CIS registration. Different forms are available for limited companies, and the whereabouts of registration like- how to register and who needs to register available at Gov. UK would help you.
- Corporation tax registration
After the company registration at Companies House, the HMRC sends a UTR number and asks the company to register for corporation tax. Online registration is the best method to get the company registered within three months of trading. The formation agent also offers the registration service, but getting the company registered for VAT and PAYE requires a different form of registration.
- PAYE registration
You can register the limited company for PAYE online if the number of directors ranges between 1 to 9. If you have only one employee in the company to work, then also you need to get the company registered which takes nearly five days to get the PAYE reference number. Post-PAYE registration, the company needs to run monthly payroll and pay national insurance and income tax to HRMC. You can take the help of an accountant or complete the legal obligations by yourself.
- VAT registration
It makes sense to you if your limited company has a turnover of more than £85,000, else it’s not required compulsorily. Initially, it’s difficult to figure out the annual turnover, so the government has facilitated VAT registration at any time of the tax year when you realize the business turnover will exceed £85,000.
For VAT registration, you need the following things- charge VAT by the right VAT rate applicability, pay VAT, VAT account, VAT records, and VAT returns submission. Businesses can register for VAT online, but the government requires some types of businesses to register using a form and then send it to HMRC.