There are various benefits of setting up your own limited company including the financial safety net of limited liability, being able to claim a wide range of allowable expenses, and the opportunity to improve tax-efficiency. It’s easy to see why so many self-employed people and small businesses follow this path and choose to form a limited company rather than operate as a sole trader.
In this post we’ll walk you through the limited company set up process from start to finish and how we can help in terms of company formation, and to help your company grow.
Choose Your Company Name
The first step on the road to setting up your limited company is to choose your company name. The name you choose should convey a professional image which reflects both the nature of your business and your business objective.
It must adhere to Government guidelines and be unique, but also not too similar to any other registered company names. You can use the company name availability checker on the Government website to check the availability of the name you have chosen.
Appoint the Directors and Shareholders
The next step to getting your limited company set up is to choose the Directors and Shareholders. The company Directors have the responsibility of day-to-day management of business operations. The Shareholders, through the shares that they own, are the company owners.
In many instances there will be just one Director and Shareholder and it can be the same person. An example here would be a contractor operating through their own limited company.
A Company Secretary can also be appointed, but this is not mandatory. The role of a Company Secretary is to manage compliance with legal regulations and also take care of administrative requirements and obligations for the business.
Select your Registered Office Address
Next you must select a registered office address for your limited company. Your registered office address is the official address of the business and the main point of contact that correspondence, including from HMRC, will be sent to.
You can use your business address, which could be your home address if you work from home, but any address can be chosen. It’s important to note that the address you use will be publicly available. If you don’t want your address to be in the public domain, as a Gorilla Accounting client you can use our registered office service to protect your privacy for just £10 + VAT per month. This is also a great time-saver as you won’t have to forward correspondence to your accountant.
Finalise your Memorandum and Articles of Association
The Memorandum of Association outlines various company details, characteristics, the company’s aims and objectives and how you’ll run it. This includes confirming the company name, registered office address, a statement on the objectives of the company, plus a breakdown of shareholder liability for any debts incurred.
The Articles of Association outlines the rules around how the company will be run in terms of operations and management. This includes such things as how decisions are made in the business, the rights and responsibilities of the Shareholders, administrative rules regarding the Directors, directions regarding borrowing funds and any procedures for general meetings.
The purpose of these articles is to ensure that the company operates efficiently and transparently and that it complies with its legal obligations. Templates are available to help complete this stage, but alternatively it can be a good idea to enlist professional help.
Register with Companies House
The next step for limited company set up is to make it official and register the business with Companies House. This can either be done online or through the post.
Various details about the company must be provided including company name, registered office address, information regarding the Directors and Shareholders and the Memorandum and Articles of Association.
PSC (Persons with Significant Control) information must be submitted to Companies House as well so they know who is running the business, plus a SIC code (Standard Industry Classification) to classify what the main activity of the company is. You may need to select more than one SIC code depending on the nature of your business.
Register with HMRC for Corporation Tax
When your company is registered with Companies House, you also need to register with HMRC for Corporation Tax. This step of the limited company set up can be completed online. Once registration is complete, HMRC will send you your Unique Taxpayer Reference (UTR). You can also register for Corporation Tax when you initially register your business with Companies House.
Open a Business Bank Account
A business bank account such as Mettle, the 100% free business bank account by NatWest, is a legal requirement for limited companies and there are many benefits of fully separating your business and personal finances.
Other Considerations
You will need to register for Value Added Tax (VAT) if the taxable turnover of your business is expected to be more than £85,000. When VAT-registered with a turnover above £85,000, you must charge VAT on your invoices and submit VAT returns to HMRC.
If your business has employees you must register for PAYE (Pay As You Earn) to ensure that income tax and National Insurance Contributions are deducted from their salaries each month. Employment legislation will also need to be adhered to, including paying above the minimum wage, providing written contracts of employment, placing eligible staff into a pension and complying to health and safety guidelines and regulations.
You should also ensure adequate business insurance is in place to protect yourself, your business and your income in the event that a third party takes legal action against you or if you’re unable to work due to illness or injury.
Work with an Accountant
Setting up a limited company is a relatively complex task if you’re not familiar with the process and requirements, and it can also be very time-consuming. This is where Gorilla Accounting comes in. For just £50 + VAT our company formation service will complete the setup of your limited company from start to finish, and usually will have your company set up the very same day.
This includes:
- Registration of your company with Companies House
- Certificate of Incorporation
- Share certificates
- Business bank account application
- VAT registration
- Memorandum and Articles of Association
- VAT flat rate scheme registration
As a limited company, however, you have increased accounting and reporting obligations than if you traded through personal ownership which can take up a lot of your time. Appointing an accountant can be extremely beneficial.
For £110 + VAT per month, our Limited Company Accounting service will ensure all your business and personal accounting needs are expertly handled. You’ll receive unlimited support and advice from your own dedicated accountant who will always be on hand to answer your queries. You’ll also receive a same day response thanks to our Client Service Guarantee and full access to market-leading FreeAgent cloud accounting software is included.
By letting Gorilla Accounting handle the financial legwork for your limited company, you’ll have peace of mind knowing that all your accounting and tax obligations are in order and you’ll have more time to focus on growing your business. Speak to an accountant on 0330 024 0406 or request a call back if you have any queries about limited company formation or our limited company accounting service.
