Companies are allowed to legally run two or more businesses under the same name in the UK. A company can have several businesses and trading names. You don’t have to set up a separate bank account for each business.
In this blog post, you will learn about the rules regarding operating businesses under one company name in the UK. Moreover, you will also learn about the best structure for operating multiple businesses.
Different Businesses Under One Name
UK Company law allows companies to have different trading names or brands for multiple businesses. A common example is a catering company that might own several restaurant chains. But the trading names can’t use the term limited or Ltd. similar to the parent company. The paperwork must always show the name of the limited company as well as the trading name.
Let’s suppose that you own a company called ABC Property Management Ltd. You can operate two or more related or unrelated businesses with different trading names like ABC Green Energy or ABC Event Management.
Operating multiple businesses under one company may not always be sensible options. You need to consider the implications of running the businesses under a specific structure before making a decision.
Profit and Loss Declaration
Companies operating different businesses under the same name usually havie separate management accounts to show separate income and expenditure for each business. However,the financial results have to be published at Companies House and declared to HM Revenue and Customers (HMRC) by submitting one set of annual financial statements and the CT600 tax returns.
The tricky part is splitting the costs between each business individually. Allocating administrative costs to each business is not easy when you have separate businesses under one company name. You need to consult with an accountant to ensure compliance with the company laws when submitting the annual accounts.
Isolation of Risks
Operating multiple businesses under the same name entails a risk since a failure in one business increases the chances of bankruptcy of the company.
Registering separate companies to manage different businesses will help in isolating riskier businesses. When you register multiple businesses as separate companies, the losses from risky businesses won’t affect the operations of profitable businesses.
Registering separate businesses under different company names is recommended if you want to lower the taxation amount. Limited company directors can elect to pay themselves salaries from the two separate companies up to the Class 1 National Insurance Threshold for which no income tax applies.
The directors can then top up the income by taking dividends from the two companies.
Forming a separate limited company for each business is recommended when you want to operate multiple businesses and is the usual choice. However operating several brands in one company can have its advantages. You should always consult your professional advisers before deciding.
Contact us if you would like more information about forming a limited company or limited liability partnership. Our UK company formation experts will guide you in registering the business under local laws.