Setting Up a Limited Company in the UK

What is a Limited Company?

• A limited company is a separate legal entity from its owners, known as shareholders.
• It offers limited liability protection, meaning shareholders' assets are usually safeguarded from business debts.

Key Steps to Setting Up a Limited Company

Choose a Company Name

• The chosen name must be unique and not already in use by another registered company.
• Certain sensitive words or phrases may require approval from Companies House.

Registered Office Address

• Every company must have a registered office address in the UK.
• This address is where official documents and legal notices will be sent.

Director(s) and Shareholder(s)

• A company must have at least one director (an individual responsible for managing the company) and at least one shareholder.
• A person can hold multiple roles (e.g., a director can also be a shareholder).

Articles of Association

• Companies typically adopt standard articles of association or draft their own.
• These articles outline the company's internal rules and regulations.

Share Capital

• Decide on the amount of share capital the company will issue.
• Shareholders' liability is usually limited to the value of their shares.

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Setting up a limited company

Legal and Administrative Procedures

Incorporation

• To officially set up the company, you must submit the necessary documents, including the Memorandum of Association, Articles of Association, and Form IN01, to Companies House.
• Pay the registration fee, which can vary based on the method chosen (e.g., online or by post).

Company Registration Number (CRN)

• Once registered, you'll receive a CRN, which is a unique identifier for your company.

Statutory Registers

• Maintain statutory registers, which include details of directors, shareholders, and significant company events.
• Keep these registers at the registered office address.

Ongoing Compliance and Considerations

Annual Filing

• Submit annual accounts and an annual confirmation statement (previously known as an annual return) to Companies House.
• Failure to do so can result in penalties.

Taxes and VAT

• Register for Corporation Tax with HM Revenue & Customs (HMRC).
• Depending on your turnover, you may also need to register for Value Added Tax (VAT).

Employer Responsibilities

• If you hire employees, register for PAYE (Pay As You Earn) and comply with employment laws.

Bank Account

• Open a business bank account to manage company finances separately from personal finances.

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Setting up a limited company

Business Insurance

• Consider appropriate insurance coverage, such as public liability insurance or employer's liability insurance.

Record Keeping

• Maintain accurate financial records, including income, expenses, and receipts.

Professional Advice

• Seek advice from accountants, solicitors, or business advisors to ensure compliance and effective management.

Benefits of a Limited Company

Limited Liability

• Shareholders are not personally liable for the company's debts beyond their investment.

Tax Efficiency

• Limited companies can benefit from various tax advantages, such as lower tax rates and tax planning opportunities.

Credibility

• A limited company structure often conveys a sense of professionalism and trustworthiness to customers and partners.

Growth Opportunities

• Easier access to funding and investment opportunities may be available to limited companies.