As a separate legal entity which is responsible for its own actions, a Limited Company has its finances separate from yours. You can set your company up as a Limited Liability Partnership, Public Limited Company or Private Limited Company. But with most small businesses, setting up a Private Limited Company would be most appropriate.
There are a few things to keep in mind when setting up a Limited Company:
What You Need to Set Up a Private Limited Company
Private Limited Companies are legally separate from who runs it, have separate finances from your personal finances, and they can keep any profits made after taxes are paid. There are a few things that you will need to set up your Private Limited company, such as:
- An appropriate company name
- Your company’s address
- At least one director
- At least one shareholder and details of the company’s shares
- Your SIC code, which identifies what your company does
- Shareholders agreeing to create your company and the written rules (memorandum and articles of association)
- All details of everyone with significant control over your company (people with more than 25% of shares or voting rights)
Although sole traders and business partnerships have different setup rules, your company’s name can’t have the same name as another registered company’s. Should you have a similar name to another company’s and should they complain, you must change your name. Typically, the company name must end in Limited or Ltd, including the Welsh equivalents of Cyfyngedig or Cyf, should you register your company in Wales. Choosing a company name must follow the rules of ‘same as’ names, ‘too like’ names, and trading names. The way you display the name is also important.
You can check the Companies House register here to find out if the name you want has been taken.
Your company’s address must be a physical address in the UK and in the same country where you registered your company. A PO box can be used but a physical address and postcode are needed. Your home address or the address of the person managing your Corporation Tax can also be used.
At least one director is required for your company, legally responsible for running the company and ensuring that accounts and reports are accurately prepared. Additionally, the director must be 16 years old or more and not have been disqualified from being a director. A company secretary isn’t needed for a Private Limited Company, although they can take up some of the director’s responsibilities. They can’t, however, be the company’s auditor or an ‘undischarged bankrupt’ unless the court provides permission.
Limited Companies are often ‘limited by shares’, as they are owned by shareholders. If your company is limited by shares, then you must have at least one shareholder who can be a director. As you register a company, you are required to provide information about your shares or ‘statement of capital’. Your company’s share capital will be the number of shares of each type and their total value, in addition to both the names and addresses of shareholders. Information about the rights each type of share gives shareholders, or prescribed particulars is also needed, including what share of dividends shareholders get, whether shares can be redeemed for money, whether shareholders can vote on company matters, and how many votes they get.
Registering Your Company
Registering your company after you have set everything up, can be easily done online if your company is limited by shares and has standard articles of association. You can register your company in 24 hours for £12 payable by debit or credit card or Paypal account. Registering by post through form IN01 can take between eight to ten days and cost £40 paid by cheque to ‘Companies House’. Same day registration can be done if the application is received by Companies House by 3 pm and you pay £100. Any envelope sent with your application must be marked with ‘same day service’ on the top left-hand corner.
You will receive a ‘certificate of incorporation’ after registering, confirming that your company exists legally, with the company’s number and date of formation. Within three months of starting your company, you need to register for Corporation Tax.
How We Can Help
You can also register through an agent, this presents huge benefits as you can be sure your company is set up in the right way, and shareholding is correct from the outset. It’s important to remember that forming a company is completely free of charge if done through an accountant; providing you sign up to use their services following this.
Here at ICS, we offer specialised contractor solutions that include a wide range of tax advisory, accountancy, and administrative services to ensure that your company is completely compliant.
We provide all the information you need while making sure that you can focus on your company, tailoring our solutions to your business. Simply get in touch with us on 0800 288 9021 – we’re more than happy to help.