One of the first – and most important – things you’ll need to do regarding your company is to choose and then register a name for it. A combination of creativity and red tape, you’ll have to settle on something appropriate, decide whether you want to be a sole trader or a limited company and then do the legwork to get yourself registered.
To help you with both aspects of choosing and then registering a company name, this piece will look at the creative considerations that businesses must weigh up, as well as the necessary steps to take when it comes to properly registering your name.
Things to do
“Sticky names” i.e. business names that linger long in the mind, are of course, a must. Something unique and memorable goes a long way to making the right impression and will stay fresh years down the line. However, creating the right handle is easier said than done, especially since name trends change year after year, making choosing the right names hard to find.
Business leader Skip Prichard suggests a checklist for the perfect name, which features the following characteristics:
Simple and straightforward is the way to go when naming a brand right now. Something that’s easy to pronounce and remember is much more effective than a nonsense phrase or an acronym, which tend to be particularly meaningless to a lot of people. The shorter in length, the better; try and limit it to two syllables if possible. Since certain algorithms and director listings work alphabetically, pick a name closer to A than Z.
Try to go for a name that conveys something meaningful and positive related to your business. When people hear it, do they instantly get what your business is about? Sure, names like “Google” and “Yahoo” are instantly recognisable, but something off-kilter like this doesn’t immediately clue people in on what your business is truly about. A meaningful name is also good for domain purposes too, conveying both what the business is about and proving useful for search engine optimisation reasons as well.
The last thing you want to happen is to settle on the perfect name, only to find out it’s already taken. Use the Company Name Availability Checker to double check whether your name isn’t already in use, or too similar to an existing company’s name.
Try out your name(s) on potential customers, investors and co-workers, asking questions about what they think to see if they give off the impression you want to convey.
Things to avoid
In trying to be unique, made up words may look good on paper but in an effort to stand out, will a nonsense name pay off later down the line? Additionally, check if there’s any international implications; it’s never a good look if your new-fangled name ends up having a negative or obscene connotation in another language.
While specificity can work in your favour, opting for too narrow of a name might pose a problem later on. If your businesses grows, you may inadvertently place limitations on yourself by referring to a location or specific product in your name. Casting a wider net that’s still going to retain the core of what your business is about is a better idea.
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Opt for words that can be easily spelled by customers. Startups commonly go for unusual spellings as a way to stand out, but this can cause trouble when they refer you to others or attempt to Google you. Having to continually correct the misspelled version of your name is sure to prove frustrating if it keeps happening.
In order to do this, you’ll need to register with Companies House, the UK’s registrar of companies. Before you do so, there are a few things to double check, alongside using the name checker we mentioned above. These include:
Once you’ve checked off the above, you’re ready to register to your business name with Companies House.
If you opt to go for the sole trader route, you don’t need to register with Companies House. You should register with HMRC instead, letting them know they should expect an annual Self-Assessment tax return from you.
It’s possible to trade under your own name or an alternative name, but sole trader names must not:
Opting to register your name as a limited company has several benefits over becoming a sole trader. For a comparison of the benefits of a limited company against sole tradership, take a look at our table below:
The company is an entirely separate legal entity from its owners
The business and its owners are treated as one entity
Forming your own company costs under £100
No set-up costs
The limited company route remains the most tax-efficient
Less tax efficient
The company pays Corporation Tax at 20% on all business profits
Business and its owners are treated as one for tax income purposes, which is calculated at self-assessment time
Company shareholders and directors pay tax on any dividends they receive, as well as income tax on salaries
Same as above
Company pays employers’ Class 1 NICs on salaries, staff pay employees’ Class 1 NICs on salaries
You pay Class 2 and Class 4 NICs
Ease of starting
Can be created in a few hours, though there’s still admin to set yourself up in business
Can be set up right away as long as HMRC are informed by 5th October of your business’ second tax year
A certain amount of paperwork required, such as dealing with Companies House
Little paperwork, no contact with Companies House needed
Limited companies may benefit from the professional image having a company may provide
The most popular business structure, but not suited to every profession
Your personal liability is limited should something go wrong with your business
Your personal liability is unlimited
Owners have shares in the business, which are easier to document and trade/sell in the future
Less straightforward to create/change shares
Tends to be easier to source as a limited company owner, as company details are more transparent
Harder to secure loans as a self-employed business
Options are much broader, e.g. choosing to delay dividends until a future tax year to minimise tax liability
Less tax planning via self-assessment system
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