Set up a limited company - business guide

   

If you want to set up a limited company online right away, simply click here.

Aside from sole trader status, most small businesses set up as limited companies. 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 higher level 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.
• HMRC must be informed if the Company has any profits or taxable income in a Company year.
• Company must complete an annual HMRC 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.

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 IN01 - Contains details of the Company's registered office, the details of the consenting Secretary and Director(s), details of the subscribers and, in the case of a company limited by shares, details of the share capital. This form replaced the old Form 10 and Form 12 from 1st October 2009.

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 payment snf documentation required to complete the registration process.

Set up a Limited Company - Types of Legal Structure

Private Limited Companies, the most typical set up 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 (Note - The Companies Act 2006 means that appointing a company secretary is no longer a legal requirement).

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.

Online Company Formation

You can form a limited company online right now. Thousands of Bytestart visitors have set up companies online via our partnership with Duport over the past 5 years - the service is fast and simple, and help is on hand if you require it.

Company Formation - Further Resources

Our sister site, Contract Eye, offers further advice if you're looking at starting out as an IT limited company contractor.

Scroll down for links to other recent company structure guides, or click here for a complete list.

• Free Accounts Software for small businesses - Download TAS Basics Now!
• Starting Up? Get 18 months free banking, and much more from Lloyds TSB!
• Home Business Insurance - Save money with Direct Line for Business. We guarantee to beat any quote for the same cover. Immediate quote available.