If you are looking to form a company with a limited company set up, you get to define your brand, own everything you do, run your business in the most tax-efficient way, and pitch for work you wouldn’t be able to get as a sole trader.
Here are some of the key elements you’ll need to know…
1. Choose which type of limited company to set up
Once you’ve decided to set up a limited company, you have to choose which type you wish to form. The two main choices are:
- Private Limited Companies (LTDs)
- Public Limited Companies (PLCs)
Most freelancers, contractors, start-ups and small businesses will opt for a Private Limited Company, as PLCs must have a minimum share capital of £50,000, at least two shareholders, two directors and a qualified company secretary.
2. Pick your name
This bit is equal parts the most fun and most frustrating part of the whole process for most new limited companies. Much like a web address, your company name has to be completely unique. You can differentiate in a few ways to guarantee a unique name – for example, a limited company name can use either “Limited” or “Ltd.” (i.e. “Crunch Limited” or “Crunch Ltd.”). You can find available company names using the Companies House WebCheck service, but with over 1,500 companies formed every day, the availability of your preferred name could be limited.
3. Set up your limited company
If step two was the fun and frustrating part, this one’s the tricky and bureaucratic part – or at least it’s seen to be. It’s actually really simple if you’re organised though. You can go online and set up your limited company yourself or through an accountant.
You just have to supply certain personal details to help Companies House identify you as a company director, and you’re good to go. Companies House will often have your limited company formed in a few hours.
4. Complete the incorporation process
Companies House is responsible for all limited company registration in the UK. Their website provides detailed information. The following documents must be completed and returned to Companies House in order to complete the incorporation process. Often, your company formation agent or accountant will complete these on your behalf:
- Memorandum of Association – limited company name, location, business type
- Form 10 – director’s names, addresses and registered limited company address
- Form 12 – states the limited company complies with terms and conditions of the Companies Act
- Articles of Association – outlines director’s powers, shareholder rights etc. (this is often provided by the formations company that sets up the limited company).
And that’s it, your company is then set up. What do you need to do next?
Well, there are a couple more bits of admin you should take care of and there are those pesky reporting and filing responsibilities you need to stay on top of.
Simple admin first, you’ll need a business bank account for your limited company.
You’ll also And you may also need some small business insurance to cover you and your business for any work your doing.
We’ll be covering many other factors relating to company formation, so keep an eye for new content coming soon!
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