Can I run multiple businesses under one limited company
Some contracting firms may be confused about the legality of operating multiple businesses under one limited company. To answer their question directly:yes it is legal. Businesses who have created their own limited companies may use trading names to divide up their entire entity into distinct units that run autonomously.
Before making a decision to pursue operating several businesses under one Limited company name, we should first be aware of a few important considerations. In this blog post we provide insight into this strategy as well as its possible repercussions.
Different businesses can be conducted under the same company name
UK company law permits business owners to operate multiple businesses using one company name. An example would be a catering company which runs multiple restaurants under its banner.
The most important aspect to remember is the fact that a trading business cannot utilize the words “Ltd” or “Limited” similar to the parent company.
What does “trading name” mean?
The term “trade name” is used as a business name when businesses do not operate under their registered corporate name.
A business usually chooses the more specific name as its trade name, rather than the lengthy, formal name that is registered.
The primary distinction between a trading name and a registered one is the fact that legal contracts are signed under the registered name because names for trading that differ from registered names aren’t recognized as legally accountable.
Business owners are able to use the possibility of using several trading names for various businesses within an individual limited company, the distinctions must be clearly defined in all documentation that is essential and other public communications media like company documents such as business stationery, the company’s website, etc.
How do you report the loss and profits of trading firms?
Companies that operate under a single corporate name typically maintain separate management accounts to track the expenses and revenue of each company.
While companies may have multiple different management accounts, Her Majesty’s Revenue and Customs (HMRC) demands that companies submit just one set of financial statements and CT600 company tax returns.
There may be problems or problems when allocating costs among different companies.
It can be quite difficult to assign business administration costs to different companies even though they are under one business name.
It is beneficial by consulting and obtaining help from a qualified accountant to ensure you’re in compliance with applicable rules and regulations for submitting annual financial statements.
What is the tax impact of having multiple businesses run under the same company?
There are a variety of tax implications of having multiple businesses operating in one organisation. One example is the process of obtaining tax relief from losses.
If you’ve established distinct entities to run each type of business that you operate. They have to be entitled to “group relief” where there could be losses in certain companies and gains in others.
In certain situations it is possible to lower the amount of profit by the amount of losses, contingent on the nature and quantity of losses and gains.
And In this scenario it is easier and efficient for a company. That has multiple businesses that fall under its umbrella.
And In many instances it is suggested to create separate entities for each business you run. Since it may help you lower the amount of Corporate Tax.
Directors in limited companies may take salary from all the companies. They manage up to the threshold of Class 1 NI where there is no income tax. They are also legally liable to receive dividends from the various companies they control.
What’s the legal, practical commercial and other aspects to be considered when operating multiple businesses within one company?
It might be simpler for business owners to manage an all-trade business since there are less obligations for reporting and administration.
There may be a need for separate entities for each business because of legal, regulatory, commercial, or other constraints.
For instance If all the businesses of the same company are considered “high risk”, it could be advantageous to create an independent legally-constituted business entity.
It is because, in the event of a company’s bankruptcy or failure the other businesses in the group would have to pay the debtors of the company. That failed by using the assets of the multi-business corporation that may include financial assets of the lucrative trades too.
What is the advantages and disadvantages of having different businesses within a single entity?
| Pros | Cons |
| It’s less expensive to register several companies under one company name, rather than creating new businesses. | If one company suffers losses that is a loss for the others, they will be liable for the cost. |
| It could be simpler from a purely administrative point of view. | The confusion can occur when there are multiple names for trading under a single company. |
| Transferring employees between businesses could become simpler. | Tax implications are high-profitable, which can cause negative. |
| There is only one insurance, registration and a licence to operate. | There may be a need to register a variety of trademarks. |
| It requires only one set of annual accounts as well as CT600. | If you intend to sell a company, it is difficult to obtain the necessary financial data if it’s coupled with other businesses in one company. |
FAQs
Does a company that is limited operate multiple companies?
A limited company is able to operate multiple businesses under one name.
This implies that the business must be divided into distinct units operating as separate business units.
Can a limited-company use several trading names?
There is a possibility for companies to have multiple trade names. But they cannot be legally registered.
These names are typically used to promote products and services.
Are two companies able to use similar names within the UK?
The name of your limited company’s registered name must not be identical to your registered company’s name.
If the name you use for your company is a lot like another company’s name, you may be required to alter the name in order to avoid a complaint or legal action.
Can an unincorporated company use the name of a trader?
Yes, businesses are able to make use of trading names. Contrary to corporate names, it’s not required to register trade names.
Do I have to register a limited-company but be unable to trade?
If you’ve already registered your company’s name however you aren’t looking to begin trading immediately then you are able to put your company in the “dormant” state.
Conclusion
As stated above there are plenty of benefits that can be gained through operating different businesses within a single firm.
But, it’s the most common practice for business owners to create independent corporations for the various companies they operate. This is due to less confusion and favourable tax consequences.
A professional accountants or accountants for limited company can assist you in making the best decision to maximise your earnings potential and boost your earnings at home.You can reach our team of specialists on 0208 133 4599 or email us at [email protected]