Are you wondering if one company can have multiple businesses and whether it’s a good idea? This guide outlines how to operate multiple businesses under a single company by assigning each a trading name. Using trading names can make it easier to grow your business, allowing you to sell different products and services without taking on more administration.
However, in certain circumstances, you can end up paying more tax when you expand in this way. Also, more than one company can use the same trading name, which could confuse your customers and expose your company to reputational risk if someone else decides to trade under the same name as your trading name. Each of your businesses will also be liable for the debts of your other businesses.
We’ll explain the pros and cons of running multiple businesses under one company, and the legal differences between company names and trading names, to help you decide whether to grow under one company or as separate legal entities.
Key takeaways
- A single UK limited company can operate multiple businesses. These businesses can use different trading names.
- Trading names aren’t unique, but they must not be the same as an existing company’s name or trademark.
- Each business, or brand, under the same limited company shares liability. This means that if one of your brands fails, your other successful brands may become liable for its debts.
Can you run multiple businesses under one limited company?
Yes, you can have more than one business under one company. One option is to give each business its own trading name, or brand name. In this set-up, each business is a brand for the same limited company.
If you’re looking to expand your business by offering different products or services alongside the ones you already offer, running multiple businesses under one limited company could be an option.
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- What is a holding company?
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For example, if you run a company that offers dance lessons, called ‘Let’s Dance,’ you may want to expand your business to offer singing and acting lessons. To do so, you could set up a separate business called ‘Let’s Sing’ to offer singing lessons and another business called ‘Let’s Act’ to offer acting lessons. All three businesses would operate under one limited company but have separate trading names. They would not be separate legal entities, and third parties, such as suppliers and HMRC, would treat their activities as part of the same company.
If you take this approach, you can save time and money by avoiding the additional administration involved in setting up and running separate limited companies.
Pros and cons of running multiple businesses under one umbrella
| Pros | Cons |
| Can sell and promote different products or services, and test new ventures without committing to incorporating several limited companies | Risk of crossing tax thresholds sooner as one limited company than as multiple limited companies |
| Reduced legal and administrative costs vs setting up multiple limited companies | More challenging to sell an individual business or get investment for it |
| Easier online marketing and search engine optimisation (SEO) under one domain | Shared liability across all business activities. If one brand fails, the others will be liable for its debts |
| A straightforward option if you want to open multiple branches or units and don’t want to register multiple limited companies | Potential for brand confusion if trading names are not distinct |
| Trading names are not legally protected in their own right |
What’s the difference between a trading name and a company name?
A company name is the official name of the limited company and is registered with Companies House. It’s unique to the company and legally protected. Trading names are names your company uses that aren’t its official registered company name. There’s no legal requirement for them to be unique, so more than one company can use the same trading name. Trading names are still subject to some of the rules that apply to registered company names.
Trading names don’t need to be registered with Companies House. Your business doesn’t have to be a limited company to use a trading name: you can also use a trading name if your business is a partnership or if you’re a sole trader.
Trading name rules
A trading name must:
- Not include the terms ‘limited’, ‘Ltd’, ‘limited liability partnership,’ or ‘LLP’
- Not be the same as, or similar to, an existing registered trademark. You can check existing trademarks using the Intellectual Property Office’s search function.
- Not include ‘sensitive’ words or expressions unless you have permission to use them. Companies House provides a list of sensitive words and expressions, and the organisations that can grant permission to use them.
You can’t use a trading name in legal agreements such as contracts; these must be entered into using your limited company’s name.
Trading name best practice
It’s good practice to carry out the following steps when using a trading name:
- Make sure it’s clear on all business documentation that you’re using a trading name for this part of the business. You should state the registered company’s name as well as the trading name of the relevant business on all correspondence, such as invoices
- For example, the business documentation for Let’s Sing would state ‘Let’s Dance Ltd, trading as Let’s Sing’, or ‘Let’s Sing is a trading name of Let’s Dance Ltd’.
- Make sure your company’s trading name isn’t like another trading name. Although theoretically permissible, if your company’s trading name is too similar to another, you could be accused of ‘passing off.’ This is a civil offence where one business misrepresents its goods or services as those of another business.
Trading name risks
If you use a trading name, another business can use the same name. This means there’s a greater risk that your business could be mistaken for another. This could be confusing for your customers and suppliers. It could also make it harder for them to find your business online. Plus, shared or generic trading names could make SEO difficult, reducing visibility in Google results and affecting customer acquisition.
Importantly, it could also damage your business’s reputation. For example, if another company called Let’s Sing became known for not paying its teachers, or for delivering poor-quality lessons, customers might think this is how you conduct business as well and would be less likely to use your services as a result.
If you want to add protection to a trading name that your company is using, you can register it as a trademark.
Company name vs trading name: key differences
| Company name | Trading name |
| Basic legal protection at Companies House | Weak legal protections |
| Only your business can use the name. No one can register a company under the same name | Another business can use the same name |
| Less flexibility when choosing a name | More flexibility when choosing a name |
| Must be used in legal agreements (required in contracts, filings, etc.) | Can’t be used in legal agreements, for example, contracts or filings with Companies House |
| Must be registered at Companies House | Doesn’t need to register at Companies House |
| Can be used by Ltds, LLPs and sole traders |
Accounting and recordkeeping for multiple businesses
If you run separate businesses under one limited company, you only need to file one set of annual accounts with Companies House and one Company Tax Return with HMRC. It’s one of the reasons running multiple businesses under a single limited company can be slightly more cost-effective in terms of administration.
That said, it’s likely you’ll still want to set up individual accounts for each business so you can understand how each is performing.
With respect to the accounts filed at Companies House, you must report the combined financial information of all the businesses operating under your limited company. Generally, you’ll need to cover the following:
- Income and expenditure
- Assets and liabilities
- Profit or loss
- Tax and payroll obligations
In addition, you must fulfil the limited company’s statutory duties. These duties include the following:
- Maintaining a single registered office address
- Keeping statutory company registers
- Filing an annual confirmation statement
- Reporting changes to Companies House and HMRC
You can only use one registered office address for your limited company, but you can use a different business or trading address for each area of activity.
Running multiple companies adds a layer of complexity to what are already demanding compliance obligations. If you don’t already have an accountant or similar adviser, we highly recommend you consult with one to ensure you fulfil your obligations.
Legal and tax implications of combining businesses
If you run multiple businesses under one limited company, a potential risk is that their combined taxable income would trigger tax thresholds that wouldn’t apply if each business were registered as a separate limited company.
For example, if your company’s turnover exceeds £90,000 in a rolling 12-month period, you must register for VAT. If your company’s total profits exceed £50,000 over a year, it’ll be subject to higher rates of Corporation Tax.
For the purposes of this example, and without any other considerations, some companies may find it more tax-efficient to register each business as a separate limited company. However, it’s important to consult with a tax adviser who can give guidance on the tax implications of your specific circumstances. While you don’t have to have separate bank accounts for each business, it’s a very good idea to distinguish the finances of each of your businesses. You should tell HMRC and your bank that you’re using a trading name for part of your business. This will help you avoid tax complications and payment issues.
When should you use multiple limited companies instead?
In some circumstances, registering your businesses as individual limited companies may be a better option, for example, if they’re very different. Doing so will keep each company’s liabilities separate. Otherwise, each of your businesses will be liable for the debts of your other businesses. Potentially, therefore, if one of your businesses fails, your other successful businesses would have to pay its debts.
You could register each business as a standalone limited company owned by you. Or you could register a limited company to be a holding company, which in turn owns each of your individual businesses as subsidiaries (naturally, this can give rise to other considerations you need to take into account, as well).
You might also find it easier to get investment in each business if they’re registered as separate limited companies. It could also be easier to sell one of your businesses if it’s a separate limited company.
However, you will have more compliance and administrative obligations if you choose to register each business as a separate limited company. For example, you’ll need to file separate confirmation statements, Corporation Tax returns, and annual returns for each company.
If you don’t already have one, you might consider hiring an accountant or legal expert to help ensure you fulfil your obligations for each registered limited company. For example, 1st Formations offers a company secretary service.
Weighing up the options
If you set up multiple businesses under one company using trading names, you’ll be able to expand your offering quickly and easily. However, there are risks to consider, such as reputational damage and shared liability, which could make this option less attractive. You should discuss the options with an accountant before deciding which path to take. If you’re struggling to decide which is the best option for you, a company formation agent like 1st Formations can also help.
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