Setting up a Limited Company

Setting up a Limited Company

10 Minutes 23-03-2021 Limited Company Sole Trader

Setting up a limited company can be a daunting task if you have never done it before. But ensuring you do it correctly will ensure you have no issues going forward.

With a limited company it allows you to define your brand and become an entity rather than a sole trader. It will also allow you to run your business in the most tax-efficient way.

We have created a 4-step process on how to do this.

 

Step 1

Choose what type of Limited company to form.

Depending on your company structure will define what type of Limited company you want to form. The two main choices are:

- Private Limited Company (Ltd)

- Public Limited Company (PLC)

Most new business start-ups to opt for a Private Limited company, as PLC's must have a minimum share capital of £50,000, at least two shareholders, two directors and a qualified company secretary. 

With a Private Limited Company (Ltd) there's no minimum share capital requirement and you can form the company with a single share worth £1.

 

UW Accountancy - LTD vs PLC

 

Step 2

Choosing the company name. 

This can be the most fun and frustrating part of forming a new company. Potentially, you are looking for a company name, domain name and a brand which fits your business model. Certainly,  in this day and age all companies are now online in one way or another. But there are a couple of ways you can guarantee your limited company name. For example, a limited company name can either use "Limited" or "Ltd" to form the name. If you choose Limited you are able to use Limited and Ltd, but if you choose Ltd you can only use Ltd.

 

You can check if your preferred name is available by clicking here.

 

UW Accountancy - Companies House

Step 3

Forming the Limited company.

This is the part which can a little bit tricky. 

You need to apply to companies’ house to form the Limited company you have chosen. You will need to supply certain personal details to Companies House so they are able to identify the company director. 

You will need to inform Companies House what type of business your Limited Company is by submitting a SIC code (Standard Industrial Classification code). 

You will also need to decide what the business address of the company. It is always advised to use a business address rather than your residential address to avoid potential impacts on your privacy. 

You will need to decide who is going to own the business. This is made up of directors and how many shares each individual has. 

Once you have entered all this information into companies house you will often have your new Limited Company formed within a few hours. 

 

Step 4

Completing the Incorporation process. 

 

Companies House are responsible for all Limited Companies in the UK. The following documents must be completed and returned to Companies House in order to complete the Incorporation process. Often your accountant will complete these on your behalf.

  • Memorandum of Association – limited company name, location, business type
  • Form 10 – director’s names, addresses and registered limited company address
  • (this doesn’t have to be where you work from but will be where the legal correspondence from HMRC and Companies House is sent)
  • Form 12 – states the limited company complies with the terms and conditions of the Companies Act
  • Articles of Association – outlines director’s powers, shareholder rights etc. (this is often provided by the formations company that sets up the limited company).

Once you have completed all this information then you are done. You will then be able to apply for your business bank account and anything else to allow your business to run.

We understand that this can be very difficult so if you require any assistance or advice then don't hesitate to get in touch with us.

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