Guest contribution by Olswang LLP, @Olswang
Olswang LLP is a partner of OneStart, the world’s largest life sciences & health care accelerator, organised by SR One and the Oxbridge Biotech Roundtable. Apply by 1 December 2014 to win £100k/$150k non-dilutive funding for your startup idea: learn more at oxbridgebiotech.com/onestart
For a startup, what’s the right business structure? Almost always, it is a company.
There are several options to choose from when deciding how to structure your business. You could set up as a sole trader, incorporate a limited liability company, form a partnership or incorporate a limited liability partnership. In practice, most – if not all – of you will incorporate a limited company.
There are many advantages of incorporating a limited company but, for you, the most important is that you won’t be able to get investors to give you money unless you set one up. This is because a limited company has a separate legal personality and is responsible for its own actions. As a result, the company’s finances are separate from the personal finances of the owners, so the investors know that their money will be spent on developing the business.
Before you can start a business as a limited company, the company must be registered with Companies House (http://www.companieshouse.gov.uk/). The registration process is straightforward and you can do this yourself, online, for only £15 via the Companies House website.
The following documents must be completed and returned to Companies House:
There are two types of limited company: private limited companies (LTD) and public limited companies (PLCs). A PLC has to have a minimum share capital of £50,000. A LTD can have as little as a penny. Most people therefore set up a LTD, and we expect that you would too.
There are several requirements that a limited company must fulfil: