A Limited Company is a UK business structure that is a separate business entity responsible for its own liabilities, giving it’s directors protection in the event debts cannot be paid.
Follow these steps to guide you through setting up your own Limited Company.
Check Forming a Limited Company is Right for You
Owning a Limited Company will bring with tax-savings, depending on your business profits but also additional administrative requirements.
There are other options available such as:
- Self-employed or sole trader;
- Limited Liability Partnerships.
Check the Name You Want is Available
You must choose a name for your Limited Company and it must not in use already.
Every Limited Company registered with Companies House must have a unique name ending in Limited or Ltd.
If you choose a name that is similar to one that is already in use, the existing Limited Company owner could make a complaint to Companies House and request you change yours.
So pick something that is fairly unique to avoid any problems.
Use the Companies House Name Availability Checker to help you choose your name.
Choose Your Company Director(s)
Every Limited Company must have at least one Director. Their details will be made publicly available on Companies house, including their correspondence address.
If you need to use your home address as your correspondence address, then you can ask Companies House to make this private to protect your private details.
Alternatively, you can pay a small fee to accountants or virtual offices to use their address for your correspondence.
Directors are responsible for running the Company and ensuring that all the administration and reporting requirements are adhered to. As well as ensuring the Company is run properly and declaring dividends.
Company Directors must be over 16 years of age.
Decide Who the Shareholders Will Be
You need at least one shareholder to set up your Limited Company. Shareholders own the Company and can receive dividends.
UK Companies are required to disclose people with significant control (PSC). In most cases that just means people with shareholdings of 25% or more.
Identify Your SIC Code
SIC stands for Standard Industrial Classification. It is a 5 digit code which identifies what your business does.
If you have a dormant company your SIC code will be 99999.
You can check for your on the Companies House website.
Prepare Your Formal Agreements
Every Limited Company must have two types of documents in place:
- Memorandum of Association
- Articles of Associations
Memorandum of Association
This is a legal document that confirms that the founding Shareholders agree to set up and take subscriber shares in the Limited Company.
If you set up your Limited Company online, this will be automatically created for you by Companies House.
Companies House have a template that you can use when you set up your Limited Company.
Articles of Associations
This legal document is basically a rule book for how the Company should be run.
If you have more than one Director you may want have your articles of association prepared by a professional along with a shareholders agreement.
Alternatively Companies House have a standard template that you can use, known as the Model Articles of Association.
Register Your Company with Companies House
You can set up your Limited Company online on the Companies House website. It costs £12 and once you have successfully registered you’ll get a Certificate of Incorporation and be allocated a Company Number.
If you prefer, you can also register by post using a IN01 form at a cost of £40.
Register for Corporation Tax
In most cases, once you register a Limited Company Companies House automatically notify HMRC of your new business. That means you’ll be registered for Corporation Tax.
If you do not receive anything from HMRC, then you must register your Limited Company for corporation tax yourself. You can do that online and once successful HMRC will issue your Limited Company with a UTR number.
Register for Self-Assessment
Directors of Limited Companies must submit a self-assessment tax return by 31 January each year. So if you are not already registered for self-assessment, then you should do so now.
The easiest way to do this is to register online.[mailerlite_form form_id=8]