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If you decide that registering a new limited company is the best way to make your entrepreneurial idea a reality, there are several steps you’ll need to take. We’ve compiled a checklist of company formation essentials for you to follow to make the process as smooth and stress-free as possible.
Choosing a legal structure for your new business is one of the biggest milestones when setting up a new enterprise, and it’s often the first major decision you’ll need to make.
There are several options available, but company formation describes when a business is set up and registered as a limited company. This means it becomes a separate legal entity, independent from you as the business owner in terms of finances, assets and liabilities. It literally limits the risk to your personal assets if anything goes wrong with the business.
The process of incorporating your own company includes letting Companies House know about the business so that it can be set up for Corporation Tax and the company’s information shown on public register.
Let’s go through the 10-item checklist you’ll need to work through in order to successfully form a limited company, including:
Getting everything ready in advance will help make the process easier!
You’ll need to give your company a name before you can get on with registering it. This isn’t necessarily as quick or easy as it sounds, because you’ll need to make sure your chosen name isn’t trademarked or already taken by any other business.
Top tip: Use HMRC’s company name checker to see if the business name you want is available for you to claim as your own without any legal ramifications.
You’ll also need to make sure whatever you choose follows the rules for naming a limited company.
You’ll need to provide Companies House with a registered business address as part of the formation process. This is where all legal correspondence and paper documents from HMRC will be sent, so it must be somewhere you actually have access to, or will be able to receive your post.
Some limited company owners choose to use a registered business address service, either through their accountant or via a third-party company, to keep their own residential address off the public record. Just bear in mind that your registered business address cannot be a PO Box address.
A SIC (Standard Industrial Classification) code identifies the nature of your business and your intended activities.
You will be able to use the SIC code search feature to help you select the correct one, but we do recommend checking HMRC’s official SIC code list beforehand so you don’t feel pressured to make a decision on the spot.
The directors in a limited company have several important responsibilities, such as making sure the business complies with its record keeping and reporting duties – so it’s important that they’re up to the job! Their details will be shared on Companies House, so you’ll need to know their:
All limited companies are legally required to have at least one shareholder, although this person can also be a director. If the shareholder is a Person of Significant Control, you will need to provide the following details during the company formation application:
In circumstances where any shareholder isn’t a Person of Significant Control and owns less than 25% of the shares and voting rights, you will need to provide the following info for them:
Plus, three security details to use as part of their electronic signature:
A company secretary is basically a dedicated person who is responsible for the administrative side of running the business. It isn’t a legal requirement to have a company secretary in a private company and many choose not to (although it is mandatory for public companies). If you do decide to appoint an official company secretary, you will need to provide the following details for them during the formation process:
A Person of Significant Control (PSC) is somebody who:
The following information will need to be provided for any Persons of Significant Control (PSC), excluding the director, shareholder or company secretary.
You will need to prepare a Memorandum of Association (MOA) and Articles of Association (AOA) when forming your company. These are basically a set of written rules agreed by the directors, shareholders, guarantors, and company secretaries, which explain how you plan to run and operate your company.
Companies House provides so called ‘model’ articles which you can tailor to your business as long as the legally required minimum is included.
You might be required to provide proof of identification, including:
Normally, two forms of ID are required, so having these things within reach before you begin will make your life a whole lot easier.
An example of when this might be necessary is if Anti-Money Laundering (AML) regulations are in play, which require the following people to provide proof of identity:
When forming your company online, Companies House will require an electronic signature and answers to any three of the following security questions for each shareholder:
Make sure you and your shareholders have the correct answers to these questions to hand so there are no delays in the application process.
If all of the information above has you feeling a little overwhelmed, don’t worry. Some people prefer to use a company formations service, or have their accountant handle it for them (it’s a service we provide as part of our wider accounting services for limited companies).
For more information on this and other tax matters, don’t hesitate to talk to us! Call 020 3355 4047 to learn more about our online accountancy services, or get an instant online quote.
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