If you’re looking to start a business in the UK, one of the first things you’ll need to do is choose a company name. This is an important decision, as your company name is a major branding point and will be how customers and clients identify your business. If you are planning a limited liability company (LLC), you may want to consider buying a company name now, even if you are not ready to start trading yet. This is so nobody else can take the name while you are waiting to get started. In this article, we will explain everything you need to know about how to buy a company name, the process of registering your new business and the naming rules for different business structures.
Setting Up a Dormant LLCWhen you buy a company name, you are actually setting up a dormant LLC. This is a legal structure that will give you limited liability protection from debts and lawsuits related to your business in the event that it ends up failing. You don’t need to worry about paying corporation tax or any other outgoings to start with because, by their nature, dormant companies do not carry out any actual business activity. To set up a dormant LLC, you need to register with Companies House and send them the CT41(G) Form to show your company is dormant. You should also send this form to HMRC so that the tax authorities also know your company is dormant. Companies House and HMRC are supposed to relay this information to each other but it is worth doing just to make sure. In order to register the company, you will need to choose a registered office address. This can be your home address if you don’t have business premises, but it must be a physical location in the UK. Once you have registered your company, you will be given a unique company number which is how your business will be identified on all official documents and correspondence.
Naming Rules for LLCsNow that you know how to buy a company name, it’s time to choose the right one! When choosing a name for your business, there are a few things to keep in mind. If you are setting up a limited company, the law requires that your company name must end with “Limited” or “Ltd.” It is also not allowed to use words like “Group,” “Holdings,” or “International” unless your company is actually engaged in these activities. Your company name cannot be too similar to another registered company’s name. This is known as a “same as” name. It is also not allowed to use a name that is “too like” another registered company’s name. This means that it could cause confusion in the marketplace and mislead customers into thinking your company is related to the other business. Your company name also cannot be offensive or include swear words because it would be viewed as obscene by Companies House. However, you may be able to get away with a pun that is not too risqué.
Different Company Names and Trading NamesLastly, you are allowed to have a different trading name and registered name. For example, your registered name could be “John Smith Limited” but you could trade as “Smith & Co.” This is so you can have a name that is easier for customers to remember and identify with. However, it’s important to note that if you trade under a different name, you will still need to include your registered company name on all official documents and correspondence.
How to Change your LLC’s Status from Dormant to ActiveWhen you are ready to start trading, you will need to change your company’s status from dormant to active. You can do this by filing a Confirmation Statement with Companies House and sending them the CT41(G) Form again, but this time showing that your company is now active. You will also need to start paying corporation tax on any profits you make from your business activities. Once you have changed your company’s status to active, you will need to file annual accounts with Companies House and pay corporation tax every year.
Naming Rules Rules for Partnerships and Sole TradersPartnerships and sole traders are alternative business structures that are different to LLCs in a few key ways. When it comes to naming your business, the most important difference to understand is that if you are setting up as a partnership or sole trader, you don’t need to register your company name. However, there are still various rules that apply to naming your company. First and most importantly, you are not allowed to use words like “Limited” or “Ltd.” in your business name. This is because it would suggest that you are a limited company when you are not which would have potential implications for your business in the future. Other than that, the same general rules apply to partnerships and sole traders as they do to limited companies. Your company name cannot be too similar to another registered company’s name, it cannot be offensive, and you are allowed to have a different trading name and registered name.
How to Choose the Right Name for Your BusinessThe right name can make the difference between a successful business and one that struggles. When choosing a name for your business, there are a few things to keep in mind:
1. Choose a Meaningful NameYour company name should be reflective of what your business does. For example, if you are a graphic designer, you might want to include the word “design” in your company name. This will help customers understand what your business is about at a glance and make it more likely that they will remember your company name when they need your services.
2. Choose a Name that is Easy to Spell andYour company name should be easy to spell and pronounce. If your company name is too difficult to spell or remember, customers will have a hard time finding you online or recommending you to others. Avoid using made-up words or over-complicated wordplay in your company name. While it might be clever, it will only make it harder for customers to find you. Instead, opt for a simple and straightforward name that resonates and will be easy to search for online and elsewhere.
3. Choose a Name with a Broad MeaningA common mistake that many businesses make is to choose a name that is too specific. While it is important to be reflective of what your business does in your company name, you also want to choose a name that has a broad meaning. This will allow you to expand your business in the future without having to change your company name. An obvious example is Amazon which started out as an online book store. Jess Bezos did not call the company “Online Book Store” because he knew that the company would eventually sell more than just books.