It is often thought that company formations and the whole LTD denomination is synonym of headaches and extremely complex paperwork. The fact is that gathering all the right information and filling out all the necessary paperwork can be quite overwhelming for a person who has no experience or knowledge about the process of limited companies in the UK.

The purpose behind a business incorporation is to make it more liquid by increasing its cash flow derived from issuing stocks. Investors can then purchase stocks from the company and participate in the revenues acquired by the operation of this venture, revenue is then distributed as dividends.

Another benefit directly derived by forming a limited company is the limited liability which comes with the formation of this business entity. Through sole proprietorship and partnerships the owner or partners are directly liable and held responsible for any loss the business might incur, if loans are issued and can't be repaid as agreed due to financial hardship the assets of the people operating the business can be used to offset the debt. On the other hand by forming a limited company the owner and partners' assets are protected and can't be ceased to cover losses incurred through business operation.

There are two ways to incorporate your business in the UK, both ways require the submission or all the pertinent information to the Companies House. The first method is through paper forms, also known as the paper process. This method involves sending the registration fee to the Companies House along with a memorandum of association, form 10, form 12 and the articles of association. This particular process can take several days and in some cases weeks to complete.

The second method relies on technology to deliver all the data to the Companies House. The main difference between this method and the first is that through the electronic process there is no need to submit the form 12 and the requirement for statuary declaration which makes things faster. Using this last process company formation can take 5 to 10 minutes which is why it is the preferred method in which several businesses rely on.

If you are doing all the paperwork by yourself it is recommended you take your time researching all of the documents necessary to incorporate your business, if you decide to do it electronically you may want to know that there are several companies which will request basic information about your business and will take care of the electronic submission, either way forming a limited company is always a great idea.