Thinking of starting up a limited company? We’ve complied a list of the key critical considerations and steps.
What is a limited company?
A limited company is a type of business structure where the company is a separate legal entity from its owners. This means the company itself can own assets, incur liabilities, and enter into contracts. Here are the key characteristics of a limited company:
- Separate Legal Entity: The company has its own legal identity, distinct from its owners and managers.
- Limited Liability: The liability of the company’s shareholders (owners) is limited to the amount they have invested in the company. They are not personally liable for the company’s debts beyond their investment.
- Shareholders and Directors: A limited company is owned by its shareholders and managed by its directors. In smaller companies, shareholders and directors are often the same people.
- Perpetual Succession: The company continues to exist even if the ownership changes through the sale of shares or the death of shareholders.
- Compliance and Reporting: Limited companies must comply with statutory requirements, including filing annual accounts and returns with the relevant authorities.
What are my responsibilities as a director?
As a company director you are legally responsible for maintaining your company’s accounting records, including preparing accounts for each financial year.
Your key statutory duties are as follows:
- File Annual Returns and Accounts: Ensuring that the company files annual returns and accounts with Companies House.
- Keep Company Records: Maintain accurate and up-to-date company records, including a register of directors, shareholders, and company secretaries.
- Pay Taxes: Ensure the company meets its tax obligations, including VAT, PAYE, and Corporation Tax.
- Maintain Proper Financial Records: Ensure accurate financial records are kept to reflect the company’s financial position.
- Comply with Employment Law: Ensure the company complies with employment laws, including health and safety regulations and statutory rights of employees.
- Data Protection Compliance: Ensure the company complies with data protection laws regarding the handling and processing of personal data.
How do I set up a limited company?
Setting up a limited company in the UK involves several steps, from choosing a company name to registering with Companies House. Let’s walk you through some of the key steps.
Step 1. Choose a Company Name
The first exciting step is your choice of company name. Ensure your name is unique and not already in use by another company. You can check this using the Companies House name availability checker.
Step 2: Decide on the Company Structure
Private Limited Company (Ltd): The most common structure for small to medium-sized businesses.
Public Limited Company (PLC): Suitable for larger businesses intending to trade shares publicly.
Limited Liability Partnership (LLP): Combines elements of partnerships and companies.
Step 3. Appoint Directors and a Company Secretary
Directors: You need at least one director who is responsible for running the company. Directors must be at least 16 years old.
Company Secretary: Not mandatory for private limited companies, but you may choose to appoint one.
Step 4: Determine Shareholders and Share Structure
Shareholders: Decide who will own the company and the number of shares to be issued.
Share Structure: Define the type of shares and their distribution. You need at least one issued share.
Step 5: Prepare the Necessary Documents
Memorandum of Association: A legal statement signed by all initial shareholders or guarantors agreeing to form the company.
Articles of Association: Written rules about how the company is to be run, agreed upon by the shareholders, directors, and company secretary.
Step 6: Register the Company with Companies House
So you are now ready to embark on your journey as the owner of your own limited company. You can register your company online or by post and we can assist you with this.
To register online:
Create an Account: You’ll need to initially set up an account on the Companies House WebFiling service.
Complete the Form: Complete form IN01, providing details such as company name, registered office address and details of directors & shareholders.
Pay the Fee: The standard registration fee is £71. Companies House usually processes online applications within 24 hours.
Do you need help?
Based in Cheshunt, Hertfordshire, we specialise in helping limited companies. We have the expertise and knowledge to assist you, ensuring you get the best advice and level of service.