Establishing your business as a limited company has a number of benefits, including a lower rate of tax and limited liability. However, a limited company requires more administration, including setting it up, than becoming a sole trader. This can sometimes be a concern for business owners, despite the many advantages of a limited company. There are a number of points to consider when launching a limited company, but it’s advisable to outsource the formation to an accountant if you’re not confident.

The name

The firm’s name has to end in the word ‘Ltd’ or ‘Limited’. There are rules to follow when choosing the company’s name; it must not already be in use by another firm and included on the index of names provided by
Companies House, or contain offensive or sensitive words. The name must not suggest that the business is connected with a local authority or the government.

The registered office

The company must have an official UK address that is used for all correspondence from Companies House and HMRC. The address doesn’t have to be the one from which the enterprise trades; it can be a residential address, or even the address of the accountant. The registered office will be included in the public register.

Director

You must have at least one company director who is above the age of 16. The person chosen for the role must not have been made bankrupt, or have been disqualified from being a director by a court. There are a number of responsibilities that must be adhered to by a company director, which include reporting to HMRC and Companies House

Secretary

You can select someone to act as company secretary if you wish, to carry out some of the duties of the business. However, this isn’t mandatory for a private limited firm. The company secretary must not have been declared bankrupt unless they have been discharged.

Articles of association

Articles of association are the rules that will outline how the company is going to be run. Shareholders and directors must agree to run the business in accordance with the articles of association.

Statement of capital

The statement of capital will outline the number of any shares that have been issued by the business and their value. The names and addresses of all shareholders will have to be provided.

HMRC

Once you have incorporated the venture with Companies House, HMRC will send a letter containing the Unique Taxpayer Reference that has been assigned to the enterprise. A list of information required by HMRC will also be sent out to the registered address.

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About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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