Currently over 3.6 million limited companies are operating in the UK. Setting up a limited company is so common because incorporations are preferred over sole proprietorships and partnerships.
If you want to run your business as a private limited company in the United Kingdom, it means your company has the following characteristics:
- It is legally unconnected from the people who drive it.
- It has separate finance accounts from your personal ones.
- Any profit it makes can be kept after the due tax is paid.
To set up a private limited company in the United Kingdom, there are 8 steps that need to be followed. Each point is discussed in detail below:
1. Set up your company
To set up a private limited company, it is required for you to register with the Companies House. This is called ‘incorporation’. For this you need to have a satisfactory company name as well as address. Furthermore, at least one director and one shareholder is necessary; also check your SIC code, it identifies the objectives of your company.
Memorandum and articles of association are also required and lastly, you need to register your company.
2. Select a company name
If you are setting up a limited company, you need to choose a suitable company name. Your name has to be unique so it doesn’t clash with any other company name. If it is similar to the title of a pre-existing company, then you might have to change it. It must also contain ‘Limited’ or ‘Ltd’ at the end.
3. Company location and address
All official correspondence from the Companies House will be carried out on your registered office address. It must be a physical address existing in the UK; it must also be in the same company your corporation is registered in.
4. Director and secretary
To make sure your company accounts and reports are appropriate you will need to appoint at least one director.
Private limited companies usually hire secretaries just to ease some of the director’s burden, but do not actually need them.
5. Shares and shareholders
Limited companies are normally owned by shareholders who have particular rights over the company. Due to this, directors may need to hold a vote before making any substantial changes in the company. At least one share is required for a company that is limited by shares.
6. Articles of association and memorandum
A legal statement is needed, signed by concerned shareholders agreeing to form the company; this is known as a memorandum of association.
Articles of association are written rules regarding the company, that are agreed upon by all the shareholders and directors involved.
7. Company registration
If you are done with all the stages of setting up a limited company, you are now legible to get your company registered. Registration can take place online.
8. Registration for corporation tax
If your company is registered with the Companies House, you also need to register it for corporation tax. This has to be done within 3 months, since you are required to pay tax from the very beginning.
All in all, these are the steps involved in setting up a limited company in the United Kingdom. We hope these points were useful.