How to Start a Limited Company
Setting up a limited company has many benefits. Not only is it a tax-efficient way to run a business, but you can also make your business more attractive to clients who would not work with a sole trader.
If you are tempted by the benefits of a limited company, you may have already decided to start your own. In this case, here are the key steps to follow.
Choose Which Type of Limited Company to Register
When you decide to register a limited company, there are different types to choose from, with the two main types being Private Limited Companies (LTDs) and Public Limited Companies (PLCs). There are other types, so if you have something more unique in mind get in touch with a good accountant.
A Private Limited Company is the most common option for small businesses and contractors because PLCs need a minimum share capital of £50,000 plus other requirements like a company secretary and additional reporting requirements. Once you have decided, you can move onto choosing a name.
Decide on a Name
When forming a limited company, you need to decide on a name. This can be a tricky part of the process because you have to choose something completely unique, and your chosen name might not be available.
However, if you have your heart set on a name, you may be able to make a minor change to ensure it is unique. For example, you can use a location reference (for example Surrey, South or a town name) to make it unique. Search the Companies House register to find out if your name is available.
Set Up the Company
The next stage when you register a limited company is to send in some basic details about yourself so that Companies House can identify you as the director and shareholder. Once you have done this, it only takes a few hours to form your company. Remember that you must have at least one director aged 16 or over (18 if you want to fully benefit from being a shareholder).
You then need to complete the process, and this involves filling out a number of forms. This is where an accountant can come in handy.
Some of the essential paperwork involves the Memorandum of Association, the Articles of Association (which deals with how the company governs itself), Form 10 (which provides the details of the director) and Form 12 (which states that the company complies with all the terms and conditions).
You will also have to pay a registration fee, and you must provide information about the shareholders.
There are other tasks you need to complete when you start a limited company, including holding the first meeting of directors where you will appoint a chairperson.
You should then hold a first general meeting to approve any property transaction between the Company and directors and deal with other issues.
You will also need to open a business bank account and sort out other issues like getting business insurance if you need it. Do not underestimate how long this part of the process may take.
Get Professional Assistance
This is just a guide to getting started when you register a limited company, and there are many areas that may be confusing if this is your first time. As such, it can help to use a formation agent.
At Keith Graham we are here to help. This is one of our business start-up services, and we can help to make the process a lot smoother. We will make sure your limited company is set up correctly so you can focus on getting down to business.