If you want to start contracting via a limited company, there are some things you should look out for when choosing a company name.
You should take your time researching possible company names, as you may trade under it for many years. You will also want to present a professional image to clients or recruitment agencies.
Here are some essential company naming tips:
1) Future Proof
When setting up your limited company, bear in mind that you may want to conduct non-contracting business through it one day.
So, although ‘Rapid IT Solutions Limited’ may be a logical choice for a contractor company, it may not be such an ideal name if you turn your hand to property development or something unrelated in the future.
Many contractors have an entrepreneurial flair, so such a consideration is worth taking on board.
Although you can always change your company name in the future, it’s wise to try and get it right the first time.
Obviously, the name must not be offensive; it must also not be too similar to an existing company name. You must also avoid incorporating trademarked words into your company name, such as ‘Microsoft Web Design Ltd’.
In June 2016, Casio Services Ltd (CSL) was incorporated as a new company via Companies House, and the choice of name was accepted. However, the famous Casio brand felt that the new entity had breached its intellectual property rights, and took legal action to force CSL to change its name (which it subsequently did). This demonstrates that you must take care to research your choice of name, and acceptance of a name by the authorities doesn’t necessarily mean it won’t be challenged at a later stage.
All companies must end in ‘ltd’, ‘limited’, or ‘plc’. In Wales, you can also opt for ‘cyfyngedig’ or ‘cyf’. Contractor companies will almost always end in ‘limited’ or ‘ltd’.
When choosing your company name, we always recommend trying to secure the related internet domain names at the same time. Not only will this protect your future web presence, but having matching company and domain names can add to your credibility.
Always secure the .com and .co.uk domain suffices, and add as many others as you wish depending on how deep your pockets are.
All of our company’s domain names are hosted with GoDaddy – they’re very reliable and reasonably good value. And, we don’t get paid for saying that.
4) Investigation
Although there may only be anecdotal evidence to support it, with IR35 so closely associated with the contracting profession, having a company name which contains the words ‘contractor’ or ‘freelancer’ may catch the eye of HMRC tax inspectors.
Given that IR35 has been very hard to apply in practice, HMRC will typically seek easy targets for IR35 investigations.
A limited company named ‘Ipswich IT contracting services limited’, with a sole director drawing a small salary and large dividends, has ‘IR35 status enquiry’ written all over it.
Of course, you may well fall outside the IR35 rules anyway, but you don’t want to stand out from the crowd when you can easily avoid doing so.
Limited Company Formation
There are several ways of incorporating – direct via Companies House, via a formations agent (which typically provides more support than going direct), or by asking your accountant to do this for you.
If you are considering setting up a company but you’re not ready to go ahead, you can always set up a company and keep it dormant. In this way, you safeguard the name but only have minimal administrative duties to fulfil each year if you’re not trading.
What if you want to change your company’s name?
Finally, if you decide that your initial choice of company name wasn’t good – you can always change it by passing a company resolution and submitting Form NM01 to Companies House.
Your company can either pass a special resolution at a board meeting or in the case of most contractor limited companies, all shareholders can sign a written special resolution. There may also be another method specified in your Articles of Association.
Once you have passed the special resolution, you should then submit (or send) the signed document to Companies House with the correct processing fee, together with Form NM01 (Notice of change of name by resolution).
If you are changing the name in a different method, as detailed in your Articles, you will need to file Form NM04 (but this is unlikely for most contractors).
Your contractor accountant should be more than happy to facilitate the submission process on your behalf if required.
