Small business and tax blog

Where a person is planning on running more than one business, he often wants to know whether he can run them all under one limited company, or whether it is better to have a different company for each business.

First, the basics. It is important to understand the difference between a company, a business, and a trading name.

A limited company is a separate legal person, which can be created (’incorporated’) in the UK almost out of nothing. It will have its own name and address, and it can employ staff, borrow money and own assets. It will be owned by one or more shareholders, and run by one or more directors.

It will have a registered company name, which will generally end in Limited or Ltd for a private company. The name must be unique, though it can be very similar to that of another company already on the register at Companies House.

A business is a wide term, usually meaning any organised activity that aims to make a profit. This could be running a shop, for example, or website design. Just as one person can run one or more businesses, it follows that any company can do just the same. So, no: you do not need to have a different company for each business.

A trading name, or business name, is just an optional name that is used for a business instead of the owner’s name. For example, a web design business might be called Wizard Websites instead of the owner’s name of John Smith (for a sole trader), or XYZ Limited (for a company). If a trading name is used, it is generally necessary to also disclose the full name of the business owner (eg ‘Wizard Websites is a trading name of XYZ Limited’), but this information need not be given as much prominence.

Each business can use more than one trading name. For example, a website business may use the trading name Wizard Websites when dealing with the general public, but may also use Premier Websites when offering an upmarket website design service to businesses.

So, just because you wish to use more than one name, does not always mean you have more than one business. If you are using different names for businesses that are not carrying our similar activities, then you may have more than one business, but as we have already established, you can still run all the businesses under one limited company if you wish.

A later post will look at the advantages and disadvantages of combining all businesses into one limited company, compared with having a separate company for each business.

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