Aside from the sole trader route, the limited liability company is the most popular business structure in the UK.
With a limited company, the liability of company directors is ‘limited’ in that the company’s finances are separate from the personal finances of the business owner. This is not the case for those who run their business as a sole trader (self employed).
Limited company shareholders are not responsible for any debts run up by the business, although banks may ask company directors to provide loan guarantees for commercial loans or credit taken out in the company’s name.
If you want to set up a limited company right away, you can do this easily online with ByteStart’s Company Formation Partner.
Registering a new limited company – the company formation process
Companies House is the regulatory body for the registration of all limited companies in the UK, and maintains the registry of companies.
Before you can start a business as a limited company, the company itself has to be registered with Companies House.
Registering a new company is a relatively simple process. You can either do this yourself, ask your accountant to do it for you, or do it all through a company formations agent.
The most popular option is to use a company formation agent. They allow you to complete the entire registration process online, and it can all be completed in a matter of hours.
Documents you will need to complete to register a limited company
When you are registering a new limited company, the following documents have to be completed and returned to Companies House:
- Memorandum of Association – this includes the names and addresses of the subscribers who are forming the limited company.
- Articles of Association – outlines the directors’ powers, and any shareholders’ rights, etc.
- Form IN01 – this contains details of the director(s), company secretary (optional), details of any shareholders, details of the share capital (if it is a company limited by shares) and details on any Person with Significant Control (PSC).
Company formation agents will have ready-made copies of these documents.
The Gov.UK website provides some useful guidance on all aspects and requirements of the company registration process, including Model Articles of Associations and the limitations imposed on company names.
Types of limited company
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 limited company must have at least one director. Following the implementation of the Companies Act 2006, having a company secretary is no longer a legal requirement, although you may wish to appoint one.
Unlike limited liability companies, public limited companies (PLCs) are allowed to offer their shares to the public in order to raise funds. A PLC must have at least 2 directors to make management decisions, and a company secretary.
Requirements of Limited Companies
There are some high level requirements which all limited companies must fulfil:
The company must be registered at Companies House
The company’s annual accounts must be filed at Companies House
A Confirmation Statement (this used to be the Annual Return (Form AR01) must be submitted every year to ensure Companies House records the most up-to-date information about the company. You can do this online or with a paper form. It currently costs £13 to file your Confirmation Statement online, or £40 if you choose the paper route.
HMRC must be informed if the company has any profits or taxable income on an annual basis.
Every limited company must complete an annual Corporation Tax return (CT600). Any liabilities must be paid within 9 months of the company year end.
All company employees must pay income tax and National Insurance Contributions (NICs) on any income they receive.
Form a limited company in just 5 mins
Over the past 10 years, thousands of ByteStart visitors have set up companies online through our partnership with leading company formation agent Duport.
Their service is one of the fastest and simplest available, taking just 5 minutes to complete, and with friendly help on hand if you have any questions. Find out more here.
More about limited companies and other business structures
Choosing the most suitable business structure for your new venture can be tricky, but ByteStart has a selection of guides to help you make the right decision;
More on ByteStart to help you get your venture off the ground
ByteStart brings you help and tips on all aspects of starting a successful small business. Check out some of our most popular guides;
- 15 Questions to ask when hiring an accountant for your new business
- Why it’s important you plan your exit strategy before you start your business
- How to create business cards that make a big impression
- Guide to Bookkeeping for new business owners
Funding your business
- How to choose the right business loan
- How to maximise your chances of securing a small business loan
- What to do when the bank says “NO”
- A Start-Up’s Guide to raising money under the Seed Enterprise Investment Scheme (SEIS)