Starting a new business doesn’t need to be a logistical nightmare. There are many steps that you can take in order to streamline the experience. This will be all the more crucial if you are getting into the real estate business. Here are some handy tips that you can use in order to set up a special purpose vehicle.
Choose a Name for Your Company
The first thing to do when you form a new special purpose vehicle is to choose a name for your company. This needs to be a name that no one else owns or is holding in reserve for a future venture. You can verify that your proposed name is original and unique by doing a quick registry check on the web.
Choose a Limited Company Package
Your next step will be to choose a Limited Company Package. A limited company is a company that is legally separate from its owners as well as its shareholders. The point is to limit the amount of liability to a purely corporate, rather than personal, level. There are a number of packages for you to choose from.
Choose the Appropriate SIC Code
As you complete the application form, you will be requested to select up to 4 SIC codes. These are the codes that will be used to specify the activity that your business will be engaged in. If you are planning to set up a special purpose vehicle, you need to use all 4 of the Business Trading Activity codes.
The SIC codes you need to select are:
- 68201 – Renting & operating of housing association real estate
- 68209 – Other letting & operating of own or leased real estate
- 68320 – Management of real estate on a fee or contract basis
- 68100 – Buying & sell own real estate
When Do You Need to Update Your Codes?
There are a number of circumstances under which you may need to update your SIC codes. This will be the case if you already own a company. Your currently existing company will already have been assigned a number of specialized SIC codes.
Are your currently existing SIC codes different from the 4 property-related SIC codes listed above? If this is the case, you can file a Confirmation Statement. This special Statement will be sufficient to update your codes to properly represent your new SPV.
Why Should You Form an SPV Company?
There are a number of key reasons why you may feel the need to form a new SPV company. The arrangement that you have for your current company may not fit the bill for your new venture. At the same time, you don’t want to let go of your current operation. You can therefore form an SPV to cover your side venture.
Are you planning to rent a property that you own for commercial purposes? If this is the case, you may find it more efficient to be listed as an SPV. This will also serve to restrict your level of liability to the corporate, rather than personal, level.
If you plan to apply for a mortgage, you may find that doing so under the guise of an SPV may be far more efficient. Setting up this type of company may be the method you need to employ in order to gain far more favorable terms. Having a business, rather than a personal account makes you far less of a financial risk.
Are you currently searching for a new round of investors for your commercial property venture? If so, you are more likely to be successful if you offer them the chance of investing in a property that is operated by an SPV. This is a much lower financial risk.
Don’t Wait to Form Your New Company
There are plenty of reasons why you may need to form a new SPV. The key to your success is not to wait. The process for forming an SPV has been made simpler and more cost-effective than at any other time in history. You can take this as the spur you need to get started. A new business arrangement is a key to success.