Set up a Limited Company –
General
Most small businesses
are set up as a Limited Company.
The term ‘limited’ derives from the fact
that the company’s finances are distinct
from the personal finances of their
owners (unlike the sole trader
arrangement).
Shareholders in limited liability
companies are not responsible for
company debts, although if required,
directors may be required to guarantee
loans or credit granted to the company.
The requirements for limited
liability companies are as follows:
-
Company must be registered at
Companies House
-
Annual accounts must be filed at
Companies House
-
Annual Return must be completed
each year to update Companies
House with basic details
relating to the company. Also
requires a small annual fee.
-
Inland Revenue must be informed
if the Company has any profits
or taxable income in a Company
year.
-
Company must complete an annual
Inland Revenue corporation tax
return and pay the due taxes
within nine months of the
Company year end each year.
-
Anyone employed by the Company
must pay income tax and national
insurance on their income.
Set up a Limited Company –
Incorporation Process
Companies House is responsible for
company registration in Great Britain.
It also has a key role in providing
information about British companies.
Before a business can set up as a
limited company (or become “incorporated”),
it must be registered with Companies
House.
The following documents must be
completed by you (or quite commonly, an
intermediary) and returned to Companies
House to complete the Incorporation
Process:
1) Memorandum of Association –
Includes Company Name, Location and Type
of Business
2) Articles of Association – Outlines
Directors’ powers, shareholder rights,
etc.
3) Form 10 – Provides Directors’ and
Company Secretary’s Names & Addresses,
together with the Registered Company
Address.
4) Form 12 – States that the Company
complies with the terms of the Companies
Act
These documents are often prepared by
private sector formation agents (or your
accountant), but there is no requirement
in law to use an agent.
The
Companies House website provides
detailed guidance and FAQ's which
describe all aspects and requirements of
the registration process, including what
you can call your limited company, and
the documentation required to complete
the registration process.
Set up a Limited Company -
Types of Legal Structure
Private Limited Companies, the most
typical setup for small UK businesses
cannot offer shares to the public, but
may have any number of shareholders.
Each Private Limited Company must have
at least one director to make management
decisions and a company secretary
PLC’s (public limited companies)
differ from Private Limited Companies in
that they are allowed to offer shares to
the public to raise funds (with shares
issued to a minimum value of £50,000).
Each PLC must have at least two
directors to make management decisions
and a company secretary.
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