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.
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 sole trader, partnerships and LLP. Read this guide for help checking which business structure is right for you.
Table of contents
- 1. Check the Name You Want is Available
- 2. Choose Your Company Director(s)
- 3. Decide Who the Shareholders Will Be
- 4. Identify Your SIC Code
- 5. Prepare Your Formal Agreements
- 6. Register Your Company with Companies House
- 7. Register for Corporation Tax
- 8. Register for Self-Assessment
- 9. Done for You Options
1. 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.
Companies House have a handy Name Availability Checker that will help you choose your company name and checks the register to confirm availability.
2. 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 must be over 16 years of age and 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.
3. 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.
4. 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.
5. Prepare Your Formal Agreements
Every Limited Company must have two types of documents in place:
- Memorandum of Association
- Articles of Associations
5.1 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.
5.2 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.
6. 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.
7. 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.
8. 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.
9. Done for You Options
Tide offers a service where they can form your Limited Company and open your business bank account all in one go, meaning it’s free to set up your business. You are legally required to open a bank account if you have a Limited Company, so with this offer, it all done for you together and you don’t need to mess around on Companies House. They even cover the £12 Companies House fee.
Register Your Limited Company with Tide (and receive a year of free bank transfers)