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Set up a limited company in Scotland: how to register a business?

Set up a limited company in Scotland: how to register a business?

Full disclaimer: this isn’t the 1970s when Scotland’s working landscape was only known for coal mining, steel and shipbuilding.

It’s 2023 and the economic landscape of the ‘land of the brave' is booming. From the arts sector to food and drink (whiskey, anyone?). Sustainable tourism to renewable energy. Financial services to the life sciences.

There’s opportunity for many across numerous sectors and the stats prove it. Small and medium-based businesses, including start-ups, contribute over £110 billion to the Scottish economy, with an estimated 1.2 million jobs provided to the local area.

There’s no time like the present to get your new business idea rolling and with our handy guide, we’ll explore how to register a business in Scotland, how long it takes, how much it costs, and all your other burning questions.

What is a Scottish limited company?

A Scottish limited company is a limited company incorporated under the Companies Act 2006 and has a registered office address in Scotland.

All companies in the UK are created under the same act as there’s a unified company law regime, but they’re separated by the three jurisdictions which all have unique laws.

A Scottish limited company must comply with Scots law and any legal proceedings will be held in Scottish courts.

Difference between a Scottish company and an English company

Beyond the differences in the location of the registered office, which must remain in the country you incorporated your company in, here are some key differences between a Scottish company and an English company.

Contract law

While English Law and Scots Law are similar across most items, contract law differs slightly. It’s important to be aware of this when setting up your business, as the execution of contracts will play a large part.

Property law

Registering company charges and multiple factors of property law vary between England and Wales and Scotland. This can include the type of land ownership, due diligence process, the treatment of positive and restrictive covenants, how to find out who owns the land, restricting disposals and exchanging contracts.

To make matters more confusing, there are significant variations in terminology between England and Wales and Scotland in this legal field. Watch out for them.

Business rates

Tax powers in the UK are reserved under Westminster, including Corporation Tax, VAT, Personal Allowance and National Insurance, but Scotland does have its taxation system.

This affects business rates, so it’s key you’re aware of this ahead of formally incorporating.

Employment law

This area perhaps has the most changes between the two, with the intricacies of factors like the formation of contracts, signing contracts, third-party rights, prescription, and harassment laws.

Even holidays are different. Scotland has an extra bank holiday day, totalling nine, but the practices around working hours on this day aren’t as concrete as in England.

In England, it’s expected that bank holidays are an automatic day off. Whereas in Scotland, employees do not have the right to take it as a holiday unless formally stated in their employment contract.

How to register a business in Scotland

While there may be three jurisdictions across the UK, all companies are registered in the same way — via Companies House. This is a unified approach across England and Wales, Northern Ireland and Scotland.

To register a company means to ‘incorporate' it and you must fill out an application to Companies House to officially gain ‘limited company' status. This can be completed most easily online, through an agent, accountant or by post.

To register, you’ll need the following information on hand:

  • Town of birth
  • Mother’s maiden name
  • Father’s first name
  • Telephone number
  • National insurance number
  • Passport number

And you must also have the following:

  • A name and address for the company
  • Have at least one director
  • Have at least one shareholder
  • Articles of association (document showing how your company will be run).

Other items will be necessary, such as registering for Corporation Tax, and all limited companies must have a dedicated business bank account.

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How much does it cost to register a Scottish company?

Registering a company costs £12 if you apply directly with Companies House online. Applying by post costs £40 and must be paid by cheque.

For those who prefer an accountant or agent to do the heavy lifting, the cost will depend on who you go with and your area. The average is between £75 — £500.

How long does it take to register a Scottish company?

If applying online, the form should be completed within an hour or less. Typically, your company will be registered 24 hours later.

Applying by post takes a little longer. But your company should be registered within 8 to 10 days.

Hiring an agent or third party would take the work off your hands, but it would take the same time if you filled out the application yourself.

Once approved, you’ll receive a Certificate of Incorporation and other information you should keep on hand for future use.

Can I move a Scottish limited company to a different part of the UK?

If you’ve set up your limited company in Scotland, you cannot move your Scottish limited company to a different part of the UK. This is because the UK has three distinct legal jurisdictions — England and Wales, Northern Ireland and Scotland.

These three jurisdictions have their legal system, origins and history, with Scotland retaining their legal systems and traditions under the Acts of Union 1707 and 1800.

But if you’re keen to relocate, you can do so — but your company will need to remain registered in Scotland and any legal matters will remain with the Scottish courts.

Can a foreigner start a business in Scotland?

Before the UK left the European Union, it was smoother for EU citizens to start a business in Scotland. Now, most foreigners must apply for a work visa before doing so.

If, however, you’re an EU, Switzerland, Norway, Iceland or Liechtenstein citizen who lived in the UK before 31st December 2020, you may be eligible for the EU Settlement Scheme.

For those needing to attain a visa, you’ll be looking at the ‘start-up' visa or the ‘innovator' visa. An endorsing body will need to assess your application and if approved, they’ll provide you with an endorsement letter.

To be successful, you must write up a comprehensive business plan that shows your idea is innovative and viable.

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Scottish company registration FAQ

Can a Scottish company have a registered office address in another country?

If you have a Scottish limited company (meaning the business was registered in Scotland) your office must remain there.

You can change the office address to anywhere else in Scotland, or if you move to England or Wales, for example, you could use a professional registered office service in Scotland and forward your mail to your new residential location.

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