Registering or incorporating your company is a key step in a startup’s life but it is just a small and relatively simple step in the process of establishing a private limited company. The process is straightforward and can be done online at Companies House. However, it is not a step that you should rush to complete, in fact, for maximum effect and the best results, be completed as part of a considered and logical plan to launch the company and secure funding. Your idea can be incubated in a corporate structure known as a sole trader and only when you are ready to start scaling up should you register a company. As a director, you will be responsible for maintaining accounts, filing returns and paying relevant taxes.
One of the primary reasons for creating a legal company is to be able to raise funds from third parties and there are many benefits in delaying the registration until you are ready to start fund raising. The must likely source of funds for an early stage company is through investors looking to deploy funds into SEIS qualifying companies or from seed stage funds.
The key steps to register your company and prepare for SEIS funding are:
- complete a business plan
- identify any co founders or initial team members
- select a company name and url
- identify your industry sic code
- register on Companies House
- register the company with HMRC and obtain a company unique tax reference (UTR)
- when you have the UTR you can then apply for advanced tax assurance under the SEIS scheme from HMRC
- when you have the advanced assurance you can seek funding – see startup funding
- when you have raised funds complete an SEIS compliance form
- register trademarks and logos
From the time you register with Companies House it will take around six to eight weeks to be granted advanced advanced assurance providing you are prompt at turning around the documents at each stage. Currently, for security reasons, the UTR is sent out by post and the advanced assurance process is based on the postal system. You can apply for email notification of the advanced assurance notice.
To share your great ideas with potential stakeholders they do need to be documented in some detail in the company business plan. The business plan is a package comprising a summary statement, a presentation to be used with potential investors, a formal document which describes the project in detail and a financial plan.
Most great ideas are the work of one individual but given the complexity of creating and running a modern tech company, having more that one founder can really help to accelerate company growth and the spread the risk for investors. Having said this, the downside to a co-founding team is that they often fallout with each other and cause a major issue within the company. In fact, so great is the risk of a fallout that this should be contemplated in the Shareholders Agreement and addressed using a reverse vesting arrangement to claw-back shares.
Company name & url:
The company name and in particular, the web url are amongst the most significant decisions you can make at this stage. Of course these can be changed later and the chances are that you will change them, but now is the time to aim to get this right. Good choices can help with fund raising and early market traction. Check candidate company names using Companies House and urls with Whois Lookup & IP search facility.