Are you considering setting up a security business? Starting a business of any type is a daunting prospect. This is particularly relevant in the security industry where over the last 2 decades, the security industry regulatory authorities have adopted a much tighter approach and where having the right licenses and accreditation has become obligatory.
With more than three decades in the security industry and as a leading UK based security contractor, Titan Security has been leading the way in the provision of high-quality security services across the UK and throughout Europe.
In this post we intend to pass on some of the experience and knowledge we have gained along the way. If this helps fledgling companies to adopt the right approach from the outset, then we will have achieved what we set out to do.
The Public Face of a Security Company is Only as Good as the Personnel that Represent It
Here at Titan Security, we have always placed emphasis on recruiting good quality staff and supporting them properly with training and ongoing supervision. Any good security company will welcome tighter regulation because none of us want to go back to the days when a security guard was considered little more than an uneducated thug.
The modern security guard is a true multi-tasker with a wide range of skills and experience. When you start out on the road to setting up security business, you should begin with the concept that your staff are the public face of your business and your reputation will stand or fall according to how they represent you.
Structuring A Security Business
Depending on your aims and objectives, there are three main potential routes to starting a security business.
- Self-employed sub-contractor: For people who have undertaken the appropriate training and hold the relevant licenses, starting out as an individual on a sub-contract basis is a great way to experience the freedom of being self-employed alongside the rewards that life in the security sector can bring. Many of the larger security companies will sub-contract to individuals for short-term and temporary contracts rather than take on full-time employees. This provides opportunities to pick and choose between the type of contracts you prefer to work on as well as the geographical area you would like to work in.
As a self-employed person (also known as a sole trader), you will need to register with HMRC online. You will need to answer some questions and once done, HMRC will create your account.
Next, you’ll receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re abroad). You’ll need your UTR to file a return. You’ll then receive another letter with an activation code for your HMRC account.
As with any other business, a sole trader is paid by submitting a properly formatted invoice to the contracting company. You should be aware that that the nature of the industry is very competitive and in many instances, and as your good reputation develops, you will need to be prepared to work on tight financial margins.
- Limited Liability Partnership (LLP): This is like a mid-way step between being self-employed and being an incorporated Limited Company. 2 or more partners can form an LLP. One advantage is that with an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence. Each member pays tax on their share of the profits, as in an ‘ordinary’ business partnership, but isn’t personally liable for any debts the business can’t pay.
- choose a name
- have a publicly available registered address. Your name cannot be the same as, or too similar to, another registered company’s name and must end in ‘Limited Liability Partnership’ or ‘LLP’
- nominate at least 2 ‘designated members’
- have an LLP agreement that says how the LLP will be run
- register the LLP with Companies House
- Limited Company: If you register as a limited company, your business becomes a separate legal entity, meaning that your personal and business assets are also separate. You will need register your business with Companies House and HMRC. If you are also a shareholder in your company, you can choose to pay yourself a smaller salary but pay dividends from company profit. As dividends are taxed differently to salary, you may pay less tax overall. The additional information you will need to register as a limited company includes:
- Your company name
- Registered office
- At least one named director of your business
- Details of shares, and at least one shareholder
- Your Standard Industrial Classification (SIC) code, which determines the nature of your business (details can be found on Companies House website).
- All shareholders – even if there is just one – agree and sign a memorandum and articles of association, which sets out rules for how the company is run.
- The final step is to register for corporation tax within three months of starting to do business.
It is always worth seeking professional advice and guidance when setting up a business. The HMRC website and the Federation of Small Businesses provide some good learning resources.
UK Security Company Licensing
Either as a sole trader or as a business, the most important form of accreditation that you need is with the Security Industry Authority (SIA) The SIA is the responsible body to oversee compulsory licensing for individuals operating within the private security industry. The licensing is designed to make sure that people working within the security industry are fully trained for the roles they perform and secondly that they are fit and proper people to be working within the industry.
The SIA issues 2 types of license:
- A front line licence is required for anyone who performs one of the licensable activities So, this includes all security guards, but also doormen or security system operators. The front line licence is issued in the form of a plastic card (it is the size of an ID card) and should always be worn where it is visible to the public.
- Non-front line licence is required for anybody holding a management or supervising position in the private security industry or employing individuals who perform a licensable activity. This licence is issued in the form of a letter which also covers key holding activities.
The Approved Contractor Scheme (ACS)
This is a voluntary scheme that depending how you approach it, provides certain benefits for you if you become an approved contractor within the security industry. Many of the larger security companies have become sceptical about the scheme and feel that it has become an expensive box-ticking exercise in which the original aims and objectives have become somewhat lost.
However, for a new business starting out in the sector and trying to build a good reputation, working towards becoming an approved contractor provides a framework for managing and delivering quality services and demonstrating a commitment to excellent customer service.
Becoming an approved contractor confirms to companies considering your services, that your staff are licensed to the right levels and that any personnel deployed to their premises will have sufficient training and ongoing supervision.
This has been written from the point of view of a person with decades of experience both in the security industry and in setting up and managing a leading security contracting firm. Even so, it is always recommended that you seek professional advice when setting up a security company.
Thank you for reading this post. We wish you all the best with becoming a business within the security industry and we urge you to make your company the best it can possibly be. Going forward, we need to preserve and even enhance the much improved reputation of the security industry.
If you would like to be considered either as an individual or as a company to go on our sub-contractor list please reach out to us. We often need to find reliable and conscientious sub-contractors both in the UK and across Europe. You will find all of our contact details and a contact form HERE.