Setting Up A Limited Company

One of the most tax-efficient and smart ways to get paid for your work is to set up a limited company. By doing this, you can create your own brand, own everything you do and have limited personal liability compared to a sole trader.

Before you start- choose what type of company

The main options are a Private Limited Company (LTDs) or Public Limited Company (PLCs). Most new start-ups will use a Private Limited Company.  LTDs do not have a minimum share capital requirement and can be setup with a share of £1 if required. PLCs need at least £50,000 of share capital, two shareholders, two directors and a qualified company secretary.

Pick the name of your company

The company name must be wholly unique to every other company out there. You can search on Companies House. One way could be to choose whether to use ‘Limited’ or ‘Ltd’ at the end of your company name.

Forming your company at Companies House

Visit www.gov.uk/government/organisations/companies-house

You need to know what type of business you are. A list of SIC codes (Standard Industrial Classification code) can be found online at Gov.uk which is provided by Companies House.

The company will need to be registered to a Registered Office Address and have a service address. You can use the same address and it will be publicly displayed on Companies House. People don’t tend to use their home address for privacy reasons.

Choose how many shareholders and what percentage of shares will they own.

On set up on the Companies House website, you will be asked to complete Memorandum of Association (company name, address and type of business), a Form 10 form for the directors’ details (names, addresses and company address), a Form 12 which show what terms and conditions the company needs to comply with under the Companies Act, and the Articles of Association which shows the shareholder rights and directors powers.

Companies House will issue a company number and a company authentication code. You will need this information for any submissions to Companies House.

What happens now

You should receive a Unique Tax Reference number from HMRC if you are trading. Please keep this safe. You can now set up a HMRC government gateway account to register for taxes.

You should consider if you need to register for VAT (if your turnover will be over £85,000 on a rolling 12-month basis) and set up a payroll scheme if the directors or future employees will receive a salary.

With your new company number, you will be able to open a business bank account.

You should consider which accounting software to use. We work in partnership with Xero accounting software and can discuss your requirements to help you choose the best option.