Knowing how to set up a limited company, also known as ‘incorporating a company,’ can be one of the first steps on your journey to building a successful business for the future. If you are seriously considering working for yourself and setting up your own business, and are specifically interested in setting up a limited company, you will need to know the steps that need to be followed in order to set one up correctly.
There are various steps and stages when setting up a business and it is crucial that this is done correctly and properly. Doing so from the outset will allow you to have the business running efficiently. It also means that should you wish o sell or expand the business; the administrative elements are in place and the business documentation ready.
Registering Your Business with Companies House
One of the very first steps you will need to take is to ensure that you are registered with Companies House. This gives you a number of advantages including being able to keep profits that your company makes after tax deductions and being able to keep your personal finances separate from the company’s
To register with Companies House, you will need the following information.
- A registered address for your company
- A company name
- Shareholders who are willing to agree to create the business
- A minimum of one director
- Your business’ SIC code (a code the defines its purpose and function)
- A minimum of one shareholder
- All the details of any PSCs (people with significant control) in the company, i.e. people who have shares or voting rights.
The Registered Office Address
This address must be UK based and this will be where all official documentation will be sent to. It is possible for you to use a PO Box address, or even your home address. However, you should remember that this address will be accessible online to the public via the register so it may be preferable to have an alternative address, for example, that of your accountant. Nevertheless, there are some exceptions to the rules of whose address can be on the register, depending on the circumstances.
For example, it is important to note that it is possible to remove your home address from the online register at Companies House if your safety is at risk as a result of the nature of your business’s work, for example if you run a security company or a business with political affiliations. If not properly managed, this could mean that company members are susceptible to being targeted.
Choosing a Business Name
To set up a limited company you will need to make sure that you have a business name. This name must end in ‘Limited’ or ‘Ltd’ and it cannot be the same as another that has already been registered as a business on Companies House. There are also a number of other rules regarding names and what is and isn’t accepted, all of which can be found on the GOV.UK website.
Appointing Company Directors
For your limited company, will need to have at least one director of the business. This is vital when it comes to setting up your company as the directors are the ones who are legally responsible for running the business. But who exactly can become a director for your limited company?
To be eligible to become a director, the appointed person must be over 16 and must never have been disqualified elsewhere from becoming one.
Whilst not compulsory, and depending on the demands of the business in question, it is also possible for limited companies to also appoint a company secretary to handle some of the administrative responsibilities. However, it is important to note that it is still only the directors who are legally responsible for the company itself, and a secretary is in no way a replacement for a director.
Memorandum of Association
Another vital step you will need to follow in order to set up your limited company correctly, is to have a memorandum of association. This is a legal statement that has to be signed by all shareholders of the company, which states their agreement to forming the company. This will then be needed by Companies House when you register the business.
Remember that is not essential for you to create your very own memorandum of association. It is possible to use the GOV.UK memorandum of association template that is available online. Nevertheless, you should keep in mind that once this legal statement has been written, it will not be possible to change it once registered, so you should make sure you have taken enough time to carefully consider what you want written in the memorandum of association. Do not rush it, before deciding to send it to Companies House.
Articles of Association
When you register your business with Companies House you will also need to provide ‘articles of association.’ Similar to the memorandum of association, you can also find templates online, whilst also having the choice of writing your own if you so wish. However, if you create your own it will mean that it is no longer possible for you to register the limited company online.