Table of Contents
It is perfectly legal to run multiple businesses under one limited company. In this situation, the different businesses will have separate trading names (i.e. brand names) to distinguish them from one another.
This is a common approach by firms that wish to diversify and expand their business. For example, by offering different services or products under separate brand names, or opening a range of bars, restaurants, or stores.
The advantage of this approach is that you can give each business a separate and unique brand identity, without the time, cost, and administrative requirements of setting up and managing multiple limited companies.
In this post, we discuss how to run multiple businesses under one limited company, and explain the potential benefits and implications you need to be aware of.
Using different trading names
A trading name is an alternate name under which a business operates, that is different from its registered (official) name. Trading names are typically used for marketing purposes, and are common where more than one business is run through a single limited company.
Some people may also decide to use a trading name if they change the nature of their business (i.e. what they sell). Or perhaps they no longer like their company name, but don’t want to formally change it at Companies House.
The difference between company names and trading names is that company names are legally protected, meaning that no two companies can be registered with the same name. This is not the case with trading names, but certain rules still apply:
- You cannot include ‘Limited’ or ‘Ltd’ in a trading name – these terms can only be used at the end of your limited company name
- You must not include ‘sensitive’ words or expressions, unless you obtain permission from the authorising body
- If a trading name is too like to the trading name of a similar business (a competitor offering the same products or services), you could face accusations of ‘passing off’ and be subject to legal issues
- A trading name must not be too similar to a registered trademark
On the one hand, you do have greater freedom when choosing a trading name, but there is nothing to prevent other businesses from also using the same name or something similar. This could be problematic in terms of brand identity, SEO rankings, and reputation.
If you use a trading name, the business will still be required to enter all legal agreements under the limited company name. Trading names are not legally identifiable for such purposes, because the business is simply a division of the company.
You must also make clear on all official business documentation (including websites) that the name is a trading name. For example: “[Company Name] trading as [Trading Name]” or “[Trading Name] is a trading name of [Company Name]”.
Preparing accounts and filings for multiple businesses
Whilst each business should maintain its own monthly, quarterly, and annual management accounts for private reference, the company itself will file only one set of annual accounts for Companies House, and one Company Tax Return with full accounts for HMRC.
The annual accounts and tax returns will comprise the combined financial information of all of the separate businesses. This includes income and expenditure, assets and liabilities, and profit or loss. All tax and payroll obligations will also be handled collectively under the company name.
Company bookkeeping, accounting, and payroll requirements can be complex for the novice at the best of times. Therefore, we recommend that you obtain professional support and advice from an accountant, particularly where multiple businesses are concerned.
Similarly, other statutory administrative duties will be the responsibility of the company, rather than each individual business. This includes maintaining a single registered office address, keeping statutory company registers, filing an annual confirmation statement, and reporting changes to Companies House and HMRC.
Pros and cons of running multiple businesses under one company
Running multiple businesses under one company can be beneficial if you’re looking to diversify and grow your business.
It can be particularly useful if you want to create and promote different products or services, open multiple branches or units, create a strong brand identity for each business, and improve your search engine optimisation (SEO) rankings.
For example, if you’re planning to sell different types of products or services, it may make more sense to market and sell your offerings under separate trading names. This will avoid confusion and enable customers to differentiate between each brand.
In many cases, using different trading names for each business is far simpler than setting up multiple limited companies, and dealing with the associated costs and complex administrative obligations.
However, it depends entirely on the individual needs of your business and what you’re trying to achieve. If one business is particularly ‘high risk’ or subject to strict regulatory requirements or legal constraints, setting up separate companies may be best.
The tax implications of combining income from all businesses could be an issue if certain thresholds are exceeded.
If the company’s total taxable turnover from all businesses is greater than £85,000 in a 12-month period, you will be required to register for VAT.
Additionally, the company will be subject to higher rates of Corporation Tax if the combined profit from all of the businesses exceeds £50,000 in a year.
Depending on the profits of each business, you may be able to avoid these tax implications by setting up separate companies instead.
You may also find it easier to secure investment, access grants and funding, or sell one of the businesses, if they are set up as individual companies.
This is a complex business decision, so we would urge you to seek professional advice from an accountant or business advisor before making any decisions. They will be able to discuss the implications and help you determine the best course of action.
Running multiple businesses through one limited company requires careful consideration and planning. It is a popular option for those who wish to diversify their products or services and expand their business ventures.
However, depending on the individual needs of your business, setting up multiple companies may be the better choice from a marketing, funding, or tax perspective.
To ensure you make the right decision for your business, please speak to an accountant or business advisor for bespoke professional advice.
If you have any questions about setting up a limited company, please leave a comment below or contact our company formation team.