If you’re currently attending school and have a great idea for a business, great news! You can already set up and own a private company limited by shares – one of the most popular business structures in the world. This is because there is no age restriction placed on company shareholders. These, the owners of a company, can be 101 or one.
In this article, we show you how to set up a company as someone who is still attending school.
Restrictions for school-aged entrepreneurs
Whilst a company can be owned by anyone of any age, there are restrictions placed on who can and can’t be a company director – the individual (or other company) who is responsible for the general day-to-day running of the company. One of these restrictions is the person (or people) named as a director must be at least 16 years old.
Because of this, if you are under 16 years old, you will need to appoint someone else as your company’s director (a company requires a minimum of one). This can be anyone who you trust, such as a parent/guardian, other family member, or friend, provided that they:
- Understand the responsibilities that come with being a company director
- Are not an undischarged bankrupt
- Are not a disqualified director
By naming someone else as the director, you are not relinquishing the power of your company over to this person as you can name yourself as the company’s person with significant control, this being the person or other corporate entity who holds ultimate control.
However, a further complication arises when you consider contracts. You may find that other businesses are not willing to work with you (yet), as any contracts you enter into are essentially unenforceable as you are a minor. Furthermore, you will not be able to open a dedicated business bank account or get credit for your business until you are 18.
Nonetheless, if you do have a great idea for a business, you shouldn’t let these challenges deter you. As mentioned, perhaps you can partner up with someone else, and when it comes to funding, explore the most traditional option – your parents. Which brings us nicely to…
Discuss setting up a company with your parent or guardian
Before you jump in and form your company, you must talk it through with a parent/guardian or teacher first. Forming a company is a big commitment that can have serious financial implications. Whilst the limited company structure provides a level of financial protection, it is still possible to make a mistake and set your company up in a way that makes you financially vulnerable.
Plus, once you have set up a company, there are other things that you need to take care of that can be a bit complicated for anyone. With this in mind, if you are committed to starting your own business, consider doing so with someone else whom you trust and who fully understands what you need to do to maintain the company.
Starting a business as a young person should be fun. You shouldn’t invest heavily by putting all your savings at stake or borrowing a significant amount from anyone. If you do find that things are getting out of control, get in touch with The Children’s Society who will be able to offer you professional guidance about debt and money problems.
You should also consider getting in contact with business owners whom you look up to and getting their advice. By all means, reach out to anyone who inspires you, but you may find that the entrepreneurs who are local to you will be more receptive and willing to listen to your ideas, offer help and potentially even mentor you.
Setting up a company is a big step. Only jump in when you’re ready.
Okay, let’s now look at how you can go about setting up your own company.
Companies House vs company formation agent
Companies House are the ‘executive agency’ of the UK government that oversees the incorporation and dissolution of UK companies. When looking to form a company, you need to decide whether to do it directly through Companies House or by using a company formation agent, like QCF.
Using an accountant is also an option, however, an accountant is likely to be using Companies House or an agent anyway (and will often charge significantly more money).
Companies House provide one basic online registration service that costs £50 (paper registration is also available for £71). With this service, the company is formed and you are provided with a digital copy of the certificate of incorporation and memorandum and articles of association.
In comparison, a company formation service will offer several packages, with different packages providing different additional services. For example, at QCF, we provide a Basic Package priced at £51.99 that, on top of the company registration (the Companies House fee is covered), includes:
- Digital copies of the certificate of incorporation, memorandum and articles of association, share certificates, and company registers with first entries
- The option to open a free business bank account (provided someone within your company is aged 18 or over)
- Free access to the Client Portal, where you can manage your company and perform numerous administrative jobs
- Free Pre-Submission Review service whereby your application is checked by one of our company experts before it’s submitted to Companies House
- Free domain name with our partner, IONOS
At the other end of the spectrum, we offer a Fully Inclusive Package priced at £129.99 which, as well as including everything mentioned above, also comes with:
- Printed copies of the certificate of incorporation, memorandum and articles of association, and share certificates
- Registered Office Address Service for 12 months
- Service Address for 12 months
- Business Address Service for 12 months
- GDPR Compliance Package
- Confirmation Statement Service
- VAT Registration Service
- PAYE Registration Service
- Full Company Secretary Service – our premium service, including 15 changes to your company per year and monthly solicitor-written guidance notes
It’s important to highlight that, regardless of who you choose to form with, the information required to register the company, and the result, is the same thing: a private company limited by shares. The key differentiator is the ongoing support and additional services that a company formation agent can provide.
Take a look at the QCF company formation packages
The company set up process
Now we’re going to look at the information that you need to provide to form a private company limited by shares. If you have all the below information to hand, completing the necessary online form should take approximately 15-30 minutes.
Company name
You can choose any name that you want for your company, provided that it:
- Ends with ‘Limited’ or ‘Ltd’ (or the Welsh equivalents; ‘Cyfyngedig’ or ‘Cyf’)
- Is unique to the Companies House register
- Could not be construed as the ‘Same as’ another name on the register
- Is not ‘Too ‘like’ another name on the Companies House register unless it is part of the same group as the original company or you have written approval from the original company
- Is not offensive
‘Same as’ example: Example Company Name UK Ltd and Ex@mple Company N@me UK Ltd would be considered the ‘Same as’ Example Company Name Ltd.
‘Too like’ example: This Iz A Company Name Ltd and This Is A Co Name Ltd would be considered ‘Too like’ This Is A Company Name Ltd.
You also need to be mindful of sensitive words and expressions. This is a list made up of, you guessed it, words and expressions that you can’t use without written approval from a necessary body. This document would then need to be uploaded to your company formation application.
Sensitive words and expressions examples: If your company name included ‘Health centre’ or ‘Health service’ in it, you would need approval from the Department of Health and Social Care. If your company name included ‘Insurance’ in it, you would need approval from the Financial Conduct Authority. You can view the full list of sensitive words and expressions here.
Our company name check tool will let you know immediately whether or not your company name is available, taking into consideration the ‘Same as’ and ‘Too like’ rules. It will also notify you if it includes any sensitive words and expressions and if it does, who you need to seek approval from.
Business activities
When registering your company, the government requests that you give them an indication of what your business will be doing. This is done by selecting one to four SIC (Standard Industrial Classification) codes from a list that is presented to you.
The codes are surprisingly focused, so you should be able to find at least one that is appropriate. For example, 10520 is the code for ‘Manufacture of ice cream’, whereas 38310 is the code to use if your business will be involved with the ‘Dismantling of wrecks’.
Once you have selected your code(s), you are not bound to that industry. The purpose of the code is to indicate your activity, it’s not a pledge. Whilst you should do your best to choose appropriate codes, you shouldn’t be concerned if you do choose a code that, further down the line, isn’t representative of what you do. Plus, you can update your SIC code(s) when you file your annual confirmation statement if you wish.
Read this blog for more information: Choosing a SIC code for your limited company
Registered office address
All limited companies require a registered office address. This is the official address where bodies such as Companies House, HMRC and the Information Commissioner’s Office, as well as the courts, will send their correspondence for the company.
Your company has no obligation to trade from the address. The only requirements are that:
- It is based in the UK
- It is not a PO box address
- You have permission from the property owner to use the address
- You have access to the official mail that is delivered to the address
Using a residential address as the registered office is permitted but not recommended because the location is placed on the Companies House public register. This means that any interested person can look up your company online and find the address, making you vulnerable to unwanted visitors and, potentially, ID fraud.
Several of our company formation packages include our Registered Office Address Service. This allows you to use our Covent Garden address as your company’s official address, meaning your parent/guardian’s address doesn’t have to appear on the public register.
Find out more about our Registered Office Address Service
Registered email address
This is your company’s official email address and where official bodies will send their email correspondence. Unlike the registered office address, this information is not made publicly available.
Director information
This is the person who is responsible for the general running of the company. For every director named in your company (you require at least one), you must provide the following information:
- Title and full name
- Date of birth (remember, the director must be aged at least 16)
- Nationality
- Occupation
- Service address – similar to the registered office address but for the director (it is published on the public register)
- Residential address (this is not published on the public register unless it is also being used as the registered office address or service address)
Shareholder information
This is the owner of the company. For every shareholder named in your company (you require at least one), you must provide the following information:
- Title and full name
- Date of birth
- Nationality
- Occupation
- Residential address (this is not published on the public register unless it is also being used as the registered office address or service address)
- The answer to 3 of the following security questions: mother’s maiden name, father’s forename, town of birth, telephone number, national insurance number, or passport number
Share information
For every shareholder you name, you must provide the following share information:
- Quantity of shares held
- Currency of shares held
- Price per share
- Class of shares
Shares define ownership of the company.
If you are going to be a joint shareholder, provided that all shareholders own an equal amount of the same sort of share, the ownership of the company would also be equal.
If you are the only shareholder in the company, regardless of whether you give yourself one share or 1,000 shares, you would own 100% of the company.
However, it’s not a good idea to allocate yourself a large number of shares without good reason. A limited company provides a certain level of financial protection to its owners. This means, were you to enter financial difficulties and owe another business money, you would only need to pay a fixed sum from your personal finances. This exact figure is the unpaid nominal value of the shares that you have.
If you only allocate yourself one share worth £1 and you haven’t yet paid for this share, you would end up owing £1. If you had paid for the share you wouldn’t owe anything.
However, if you allocate yourself 1,000 shares worth £1 each (and you haven’t yet paid for these), you could be liable for £1,000.
Because of this, to limit your financial liability, we recommend only allocating a low number of shares, each with a low individual value.
Allocating shares is the most complex part of the company formation process. Take a look at the below blogs for more information:
If you have any questions, get in touch and we’ll be happy to help.
People with significant control (PSC) information
This is the person who holds ultimate control of your company. A person is deemed to be a PSC if they have a noteworthy degree of power in the company which is defined by their ‘nature of control’. For example, a shareholder who has 75% or more of shares in the company would be defined as a PSC (typically the PSCs in the company are also shareholders).
In rare instances, it is possible for a company not to have any PSCs.
For every PSC named in your company, you must provide the following information:
- Title and full name
- Date of birth
- Nationality
- Occupation
- Service address
- Residential address (again, this is not published on the public register unless it is also being used as the registered office address or service address)
- Nature of control information – you will be provided with several questions, you just need to select the answers that are appropriate to your PSC
Read this blog for more information: People with significant control – who are they and what do they do?
Articles of association
This is the internal company document that outlines how the business is going to be run and contains information on the responsibilities of the directors and the level of influence shareholders have (amongst other details).
Most people choose to use a default version of this document (known as model articles) that is appropriate for the majority of companies. This can be selected as part of the company formation process.
It is also possible to write and upload your own version of the articles of association (known as bespoke articles) if there are specific details that you want to include. We recommend only doing this if you have professional assistance as incorrectly drawn-up articles of association can result in your company formation application being rejected.
Read this blog for more information: What are the articles of association?
Review the information you have provided
That’s all the information you need to provide to form the company. All that’s left for you to do is review everything you’ve entered just to ensure that you haven’t made any mistakes. Once you’re happy, you can submit the application.
If you are using one of the QCF formation packages, your application will be reviewed again by our team of company experts. They will then send the application to Companies House on your behalf.
Companies are often formed in as little as three to six working hours. As soon as your company has been formed, you will receive digital copies of the certificate of incorporation, and memorandum and articles of association (if using QCF, you will also receive extra information about the additional services included as part of your order).
So there you have it
That was how to set up a company whilst still attending school.
Follow the advice covered in this blog and accompanying articles and you will find that setting up your company is a relatively simple process.
If you have any questions about the company formation process or your responsibilities after forming a company (such as registering for Corporation Tax, registering for Self Assessment, filing a confirmation statement, or filing annual accounts), please leave a comment and we’ll get back to you shortly.
And remember, before jumping in and setting up your own company, it’s really important that you talk it through first with your parent/guardian or a teacher.
Thanks for reading, and best of luck on your business adventure!
