Navigating Ltd Company Setup

On May 1st 2024 Companies House introduced a raft of fee increases which included the Company Incorporation fee. If you plan on forming a limited company, you’ll now have to pay a £50 incorporation fee to Companies House rather than the previous fee of £12. Should you require a same day turnaround on your ltd company set up, you’ll have to pay a £78 fee.

Despite this increase being in the pipeline for some time, as well as other increases that will affect limited company owners downstream such as the fee to file your annual confirmation statements, the number of businesses being incorporated remains high.

Operating through your own limited company outside of IR35 is the ideal scenario for self-employed people. There are numerous well known benefits of this business structure including financial protection thanks to limited liability as well as being able to optimise tax-efficiency to boost take home pay.

To get to this point, however, you have to get your limited company set up and the incorporation process can be daunting for those that haven’t tackled it before. Read on for a guide on the process to get your limited company set up and how Gorilla Accounting can help.

Select Your Company Name

The first step to get your limited company set up is to decide on the company name, and there are some caveats here. The name you choose must adhere to the Government guidelines so inappropriate phrases and trademarked terms aren’t permitted.

Your company name must also be unique. There are around 5 million private limited companies in the UK so you might have to tweak your first choice if it’s already registered. You can check availability using the Government’s company name checker service here.

Confirm Your Registered Office Address

All limited companies must have a registered office address that must be registered with Companies House during the limited company set up process. It doesn’t have to be the same address from which your company operates but it must be a physical address that correspondence, such as that from HMRC, can be sent to.

Details of your registered office address will be available on public record through Companies House so if you’d like to protect your privacy, you can use a registered office address service.

Appoint Company Directors and Shareholders

A limited company must have one or more Shareholders and Directors. If you’re a contractor operating through your own limited company, you can be the sole Director and Shareholder and would own 100% of the business. You must also identify the Persons with Significant Control (PSC) and confirm them to Companies House during the incorporation process.

Complete your Memorandum of Association

The Memorandum of Association is a single page legal statement containing the company name and names and signatures of the subscribers forming the company and the date. If you set up your limited company online, the registration portal will automatically generate the Memorandum of Association for you.

Prepare the Articles of Association

The Articles of Association outline how the internal workings, operation and management of your business will be conducted. This includes but is not limited to the registered office address, information about the Directors and Shareholders including responsibilities and duties, a breakdown of the company’s share capital, rules for company meetings and guidelines regarding dividends and remuneration.

Choose Your SIC Code

As part of the limited company setup process, you must confirm a Standard Industrial Classification (SIC) code. The purpose of this is to enable the Government to track and analyse the number of company formations at industry/sector level.

You can choose up to 4 SIC codes and if you can’t find an SIC code that’s an exact fit for your business, it’s fine to choose one or more that are a close match.

Register Your Limited Company

The next step is to complete the registration process and pay the incorporation fee which can be done via the Government portal or by post using a paper IN01 form. Companies House will then supply you with a Certificate of Incorporation, the company formation date and your limited company number.

Register for Corporation Tax

All limited companies must pay Corporation Tax on their profits so you must register to pay Corporation Tax within 3 months of your business starting trading. You can register for Corporation Tax at the same time as registering your limited company with Companies House.

Open a Business Bank Account

Having a dedicated business bank account is mandatory for limited companies. A limited company is a separate legal entity from its owner(s) and the finances of the business and the owner(s) must be completely separate. This has the added benefit of making your business finances easier to manage.

Gorilla Accounting partners with Mettle by NatWest. Mettle is 100% free and is built for small businesses, contractors and freelancers. Mettle integrates with accounting software such as FreeAgent and funds up to £85,000 are protected by the FSCS. Find out more about Mettle here and apply for an account in minutes.

Protect Yourself With Insurance

When you’re self-employed you don’t receive the same protections and benefits that employees get so it’s a good idea to consider contractor insurance to protect yourself and your business against unforeseen circumstances and liabilities such as being unable to work through illness or injury, or legal action being taken against you.

If you’re looking for contractor insurance, Gorilla Accounting partners with Qdos to provide unbeatable cover and value. Qdos are industry experts with over 30 years’ experience of providing award-winning, flexible, tailored contractor insurance solutions. Get a quote from Qdos today.

Consider Registering for VAT

The mandatory VAT-registration threshold is £90,000 so if your VAT-taxable turnover is more than this, or if you expect it to be, then you must register for VAT. You can still register for VAT voluntarily if your turnover is below the threshold. If you’re unsure about this, we can advise you.

Work With an Accountant

Once you’ve completed your limited company setup, one of the best decisions you can make to help ensure the long term success of your business, and to give yourself some breathing room to focus on growth, is to appoint a limited company accountant.

When you work with Gorilla you can rest assured that all your business and personal accounting needs will be expertly managed by your own dedicated accountant. We understand that as a new business owner you might have lots of questions which is why we provide all our clients with unlimited support and advice no matter how many times you contact us.

You’ll also receive a fast turnaround to your queries with a same day response thanks to our Client Service Guarantee. Industry-standard FreeAgent cloud accounting software is also included in your great value monthly fee.

Your dedicated accountant will ensure that you are fully compliant with all your tax and reporting obligations and as part of our service will ensure that your business is operating as tax-efficiently as possible to maximise your take home pay.

Whether you’re a new limited company startup or an established sole trader looking to incorporate, we are company formation experts and can take care of the full limited company setup process for you and will usually have your limited company incorporated the very same day. Visit our Company Formation page to find out more.

To find out more about how we can help with limited company set up or your accounting needs, speak to an accountant on 0330 024 0406 or request a callback.