As an accounting firm it’s our privilege to regularly support entrepreneurs in starting up and building their business. As such we often talk to people who are looking into company formation.
We wanted to take you through the most common points of confusion or stumbling blocks, so that if you’re getting ready to start the process (including as a contractor limited company) you know what to expect and whether you’ll want any support.
What is a Company Formation Agent?
Company formation agents work with businesses to assist with company formation. That means they’ll help you determine and set up your company structure and generally streamline the process.
You’ll occasionally hear them called secretarial agents. We have acted as secretarial agents for many businesses.
Do I Need a Secretarial Agent?
No, you don’t need a secretarial agent yourself – but they work they’d do still needs to be done.
If you register as a company with Companies House (online or by post) you’ve done everything you need to do. Of course, the registration process can be a little more complicated – the government offers step by step guidelines which will give you some idea.
As such, many business owners like to have someone experienced to assist them when collating documentation for registration.
Can I Set Up a Limited Company While Employed?
Broadly the answer to this is yes, but we’d recommend you check your employment contract first; there are no restrictions in law, but your contract may have clauses that would affect this. This is especially true if you’re setting up a consultancy in the same field you’re employed in.
What Documents Do I Need for my Limited Company?
There are two key documents required to form a limited company. These are the Memorandum and Articles of Association.
Taken together, these set out the details of your business activity and your intent for form a company.
In addition to these documents you will need to set out an address for your registered office, as well as the names and addresses of your directors, shareholders, and other people of importance to the business.
Do Limited Companies Have Minimum Turnover Requirements?
We run into this question surprisingly often. The answer is no, there’s no legal minimum, but companies must register for VAT when their annual turnover exceeds £90,000 (at the time of writing) and this may be why people think limited companies have a minimum turnover.
We will also note here that if your annual turnover is not particularly high, financially it may make more sense to defer company formation for the time being. However, especially as company formation affects questions of liability as well, we wouldn’t want to give an approximate value for this figure as it will depend on your specific circumstances.
Instead we recommend you consult an expert – we’d be happy to discuss it!
How Much Does Registering a Limited Company Cost?
At the time of writing, the fee to register your limited company online is £50, or £78 if you require your company to be incorporated on the same day you register. If you register by mail, you’ll pay £71.
For the most part, there’s no need to organise same-day registration; when we’ve seen it before, it’s usually been because a time-sensitive contract needs the company to be incorporated before it can be signed.
Errors in your registration can lead to penalties when they are discovered. That’s one reason secretarial agents are so often involved.
Do UK Businesses Have to be Registered?
Limited Companies must register with Companies House and HMRC. Other businesses do not need to register with Companies House but almost all of them will need to register with HRMC; the only exception is for sole traders who earn below £1000 annually.
HMRC may penalise the business with fines or increased interest if it is found you didn’t register when you should have done.
