Are you embarking on the journey of setting up a limited company? Firstly, you may want to read my blog about the difference between being a limited company or a sole trader. If you’ve decided that this is the path for your business, congratulations! This is an exciting time for you. I’m sure you have a lot of questions and would therefore like to know how to set up as a limited company. If that’s the case, read on below.
The benefits of a limited company
Firstly, let’s go over why you’re setting up as a limited company. The benefits are:
- Firstly, limited companies are able to run in a more tax-efficient way
- You look more professional to potential clients and projects
- As you are separate from the business, it has its own legal identity. In short, this means your personal assets aren’t exposed.
- There is limited liability.
- You are entitled to more allowances and tax-deductible costs.
- In addition, your company name is protected.
How to set up your limited company
1. Choose the type of limited company you’d like to set up
You have a choice of two: Private Limited Companies (LTDs) or Public Limited Companies (PLCs). Not sure which one to go for? Private Limited Companies are more suited to freelancers, start-ups, contractors, and small businesses. This is because you must have a minimum share capital of £50,000 for a PLC, as well as at least two shareholders, two directors, and a lastly, a company secretary. You can set up a LTD with a single share of £1.
2. What is your company name?
Your company name must be absolutely unique. Picking a name is meant to be fun, but it can get a little frustrating. Furthermore, you will need to check whether your name is already taken before submitting it. You can choose from Ltd or limited at the end of your name. You can do this on the Company Name checker on Companies House website.
3. Time to submit the paperwork
Now it is time to register your name with Companies House and submit your application on the Government website.
Companies House will need to identify you as the company director. In short, this is what you will need to submit:
- Submit a SIC code (Standard Industrial Classification Code) This lets them know what type of business your limited company will be carrying out. You can get a list of the codes over on the government website.
- Register an address for your business, this will be the Registered Office Address. After that, you also need to provide a service address. Feel free to get in touch if you find this bit tricky. You will need to carefully think about publicising your residential address here. You can opt to join a virtual office space, and have your address sent via a service.
- What ownership will your company have? How many shareholders will you have and what will their shareholding be?
Once everything is submitted, your limited company completes set up by Companies House within a few hours.
4. Incorporation process
The Companies House website will have all the details on this. You need to supply the Companies House with the following documents subsequently sealing the incorporation process:
- Memorandum of Association- this is your limited company name, your location and the business type.
- Form 12- this form states that your limited company complies with the terms and conditions laid out by the Companies Act.
- Articles of Association- this reveals the director’s powers, shareholder rights, etc.
- Form 10- the directors names, addresses and the limited company address that requires registration. This doesn’t have to be where your business is operating from, however, it is where legal correspondence is sent to from HMRC and Companies House.
As an accountant, I can complete these on your behalf.
Now you need to make sure you have a decent business bank account, and more importantly, put the necessary insurance in place. If you would like more advice on how to set up a business, read our handy blog here.
Did you know we offer a limited company set up service?
Get in touch with McCarthy Browne today to see how we can help take the headache out of setting up as a limited company.