How to Run Multiple Businesses Under One UK Company Without the Need of Forming Multiple Companies

In the UK, a single limited company can host multiple businesses.

The parent company acts as an umbrella for the small businesses, but they have separate trading or brand names to distinguish them.

Running multiple businesses under one company is a common approach by firms that want to expand and diversify their business. For instance, a company can offer various services or products using different brand names.

Business owners without the time, administrative requirements, and finances to set up and run multiple companies will find this plan compelling.

If this sounds like you, we’ll discuss how possible it is to run multiple businesses under one UK company without the need to form multiple companies, the potential benefits, and the implications you must know about.

What is a Trading Name?

Trading names or business names allow limited companies to operate under a different name other than the registered company name. Hence, a business can have several trading names depending on its nature, yet they all function under the same Limited Company.

However, all different businesses operating under one limited company must be made clear in documentation, business stationery, and on websites. All business structures, including sole proprietorships and partnerships, use trading names.

Use of Different Business Names

A trading or business name is the title under which a business operates and is different from the official name under which it’s registered.

Trading names are used to market different businesses that are run under one limited company. Some business owners use trading names after changing the nature of their business.

The reason can also be that they’re NO LONGER amused by their company name, but they don’t want to go through the process of changing it at Companies House.

So, what’s the main difference between a company name and a trading name? The significant difference between the two is that company names have legal protection; it means that no other company can be registered under the same name.

When you decide to use a trading name, you’re still required to adhere to all legal agreements under the limited company name. Trading names are a division of a limited company, meaning they are not legally identifiable.

On official documents, a trading name must be adequately highlighted as such on stationery: “[Company Name] trading as [Trading or Business Name]” or “[Trading/Business Name] is a trading name of [Company Name]”.

The Rules of Trading Names

When it comes to choosing a trading name, these rules apply:

• A trading name can’t have the suffix ‘Limited’ or ‘Ltd’ as they’re only used after your limited company name.
• No use of ‘sensitive’ words or expressions unless you get written permission from the authorising body
• A trading name that’s too similar to another business of the exact nature is prohibited. As a result, you can be subject to legal problems with accusations of ‘passing off’.
• A trading name should always be different from a registered trademark.

Since a trading name isn’t legally protected, you have a lot of freedom in choosing it, but there’s nothing you can do to prevent other businesses from using the same name or something similar. As a result, a brand’s identity can be at risk, and it can also affect reputation and SEO rankings.

Benefits of Running Multiple Business Under One Limited Company

UK company law permits business owners to trade various brands under one limited company. However, you must remember that trading names aren’t allowed to be used as Limited or Ltd, like the umbrella company.

For instance, related goods and services can be offered by a single company. Still, if the business decides to DIVERSIFY, it’s more sensible to use different trading names while under the same mother company. Here are more benefits of running multiple businesses under one UK company without the need to form multiple companies.

1. Streamlining Functions and Management

Setting up a limited company and having multiple businesses operate under it is cost-effective.

All businesses function under a single management: sales, Human Resources, marketing, distribution and logistics.

Operating under the same umbrella is not only cost-effective, but the strategy also ensures that the same management is replicated throughout all businesses. In turn, customers receive a standardised and consistent experience, leading to business growth and stability.

2. Boost Brand Image and Credibility

Running multiple businesses under a single company helps develop brand identity and credibility in the market.

Unfortunately, it may be challenging to build brand awareness and credibility when selling various products and services. However, using separate businesses dedicated to a specific brand makes it clear on the products or services you offer.

As a result, clients know what you’re dealing with from the business name. For instance, if the mother company is Mega Limited, the subsidiaries can be Mega Electricals, Mega Plumbing, Mega Chemicals, or Mega Construction.

3. Flexibility and Ease of Diversification

Sometimes, it’s highly beneficial for any business to respond quickly to new market trends.

Once there’s a new business opportunity, establishing a new branch to meet the demand is easy without registering a new company at Companies House.

4. Financial and Tax Efficiency

No matter how many companies function under a single limited company in the UK, you only file tax returns as one entity with Companies House. Similarly, you can also file a single company tax return with HMRC.

The annual tax returns and accounts you file are an amalgamation of all other accounts for each business. They display a general financial picture for all companies as a whole. As a result, directors have less burden when meeting their roles and obligations. Plus, tax and payroll are also managed by the mother company rather than individual business entities.

Depending on the size and business structure, it may be necessary to keep different accounts for every business. These individual accounts allow the various businesses to determine their gains, losses, assets, liabilities, and the general financial health of every business.

5. Improved SEO Performance

Once you set up multiple businesses under a single company, you have to create separate websites and social media accounts.

As a result, customers can identify with the brand they desire, which increases organic traffic and boosts SEO performance and sales conversions.

Establishing unique websites and social accounts for each business also reduces confusion for potential customers and search engines because all businesses are distinct.

Disadvantages of Running Multiple Businesses Under a Single Company

Although running multiple businesses under a mother company is a viable option for business owners who wish to diversify or expand, the approach also comes with some challenges. However, before you venture into this strategy, directors, shareholders, and members need to understand the following issues.

• If one entity becomes a liability, it affects all other businesses, and in extreme situations, they may have to pay the price for it.
• When there are various businesses under one company, confusion may occur.
• Once companies begin to have a high tax turnover (over £90,000) in a financial year, the company might be required to register for VAT. Also, if the profits surpass £50,000, the company is liable for higher corporate tax.
• It might be necessary to register for various trademarks to avoid infringement and passing off when names are too similar.
• Lack of brand protection means another company can have a similar name, and there’s nothing you can do to stop it.

Accounts and Filing for Multiple Businesses

For reference, each business operating under a parent company should keep monthly, quarterly, and annual accounts. The mother company files only one set of annual accounts at Companies House. As for HMRC, the company files one Company Tax Return.

The annual accounts and tax returns comprise a combined financial report for all separate businesses. It includes income and expenditure, liabilities and assets, and profit or loss. All tax and payroll duties are handled collectively under the company name.

Payroll, bookkeeping, and accounting can be complex duties for novices. Hence, it’s advisable to hire a professional for support and guidance. Likewise, statutory roles will be the parent company’s responsibility, and they include:

• Retaining the same registered office address
• Keeping statutory company registers
• Filing an annual confirmation statement
• Notifying Companies House and HMRC of any changes in a company

Whilst you will only have one registered office, each business can have a separate business address (aka trading address).

Tips to Run Various Businesses with Success

Although operating multiple businesses under a single company may be challenging, it’s a great, rewarding strategy when done right. Here are some tips to help you run multiple businesses successfully under a mother company:

1. Do thorough research on your business name – A business name should be unique and easy to read for customers to remember. Hence, you need to do thorough research on a business name before you decide to use a particular name to avoid infringement. Similarly, you can take a step further by copyrighting your business name to ensure it’s protected and there’s no passing off by others.
2. Find synergies and shared resources – Identify businesses that can complement each other so that they share infrastructure, resources, and systems. As a result, you save costs and enhance operational efficiency.
3. Capitalise on delegating and empowering leadership – Managing multiple businesses can be hectic. Hence, there is a need for effective delegation and empowering others to become leaders to help run the business. To this effect, consider hiring people with some experience and skill, like managers, and promote individuals with a proven track record in their line of work. Trusting your team and allowing them to make some decisions can forge a good relationship in the workplace, increase productivity, and grow each business to greatness.

Operating multiple businesses under an umbrella company is doable as long as there’s a clear strategy and effective management for success.

Frequently Asked Questions

How can I run multiple businesses under one company?

You can run multiple businesses under a single company by forming a Limited Liability Company (LLC) and then creating different brands under it. Alternatively, you can form multiple LLCs and then operate them under a mother LLC that will act as the holding company.

Can two companies be registered under the same address in the UK?

You can register two companies at the same address in the UK since no law restricts it. However, both companies must be registered in the same jurisdiction and have a UK address.

Is there a name for a company that owns multiple businesses?

A company that owns multiple businesses is known as a Conglomerate. The companies under a conglomerate are independent entities that function across different industries.

Conclusioin

Operating multiple businesses under a single company is an excellent approach for companies that want to diversify business ventures. The strategy is effective if it’s done with careful consideration and planning.

However, this business approach may depend on the individual needs of a business, such as size, financial performance, and structure.

Limited companies can use trade names to sectionalise the entire company into distinct units that function independently. The strategy has many advantages when done right, and also there’s a need to understand the drawbacks to ensure you make informed decisions geared towards success. Do you have any questions about how to run multiple businesses under one UK Company? Kindly contact one of our experts here today.