Yes, it is possible to run two or more separate businesses under a single limited company. This involves the use of trading names to compartmentalise the overall company into separate units, each of which can be run as a unique business.
What are trading names?
Trading names, also known as ‘business names’, essentially provide a way for limited companies to trade under a name that is not their registered company name. For example, if the registered company name is “Bristol Green Hammocks Ltd”, a trading name could be “Bristol Green Hammocks”, “Green Hammocks of Bristol” or even a completely unrelated name such as “Blue Tents of Newcastle”.
Furthermore, it is possible to use multiple trading names to run several different businesses, e.g. “Bristol Green Hammocks” and “Blue Tents of Newcastle”. But each of these businesses will be trading as a division of the limited company and this must be made clear in any company documentation, on websites, business stationery, etc.
Please note: Trading names are not just used by limited companies – other business structures such as sole traders and partnerships can also use trading names.
What are the rules for trading names?
There are certain rules pertaining to the use of business names, including:
- Trading names must not include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘LLP’, ‘public limited company’ or ‘plc’
- They cannot contain any ‘sensitive’ words or expressions – unless permission is obtained
- If it is too similar to the trading name of a similar business (e.g. a competitor), this could lead to accusations of ‘passing off’
- A trading name should not be too similar to a trademark
As mentioned previously, the name of the limited company should be included on all company documents in addition to the trading name. This includes business letters, order forms, and websites.
What are the benefits of running two or more businesses under one company?
Various different related goods and services can be provided by a single company. However, if a business decides to significantly diversify, it will often make more sense to trade the diversified component under a different name.
This can help with brand building so that the different product lines are associated with specific trading names. For example, Bristol Green Hammocks Ltd may find that its company name helps them to sell green hammocks to customers in Bristol, but it could put them at a disadvantage when trying to sell blue tents to customers in Newcastle.
Running multiple businesses under one company instead of incorporating new companies to run individual businesses will have the benefit of saving time and money on company secretarial work, such as maintaining statutory registers, and also annual filings such as Confirmation Statements and annual accounts.
Multiple limited companies
Another option, rather than running multiple businesses using trading names, is to register multiple companies which then become subsidiaries of the parent company. If the companies are genuinely different businesses, this may help to ring-fence certain liabilities if one company finds itself in financial difficulties.
It can also help to secure investment or sell a particular venture further down the line. However, maintaining multiple limited companies requires a lot more administration and accounting, which may outweigh any benefit for smaller businesses with relatively straightforward tax affairs.