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A Guide to Setting up a Limited Company
Forming a limited company is the most popular way to establish a business. And it’s quite straightforward, but there are various legal implications so it’s essential that you follow the correct procedures.
Of course, the easiest way to do this is to find yourself a good accountant to advise you on all aspects of setting up a limited company, its ownership profile and the best form of remuneration for tax efficiency.
You should also seek expert business finance advice for any financial requirements your company may have.
There are around 2.6 million registered companies in the UK - with 440,000 new registrations made every year.
To form any kind of company, you need to register with Companies House. A limited company can be in an individual’s name. With a private company limited by guarantee – the members’ liability is limited to the amount they have agreed to contribute to the company’s assets if it is wound up.
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 basic legal requirements for limited liability companies are as follows:
- Company must be registered at Companies House
- Annual accounts must be filed at Companies House
- An annual return must be completed each year to update Companies House with basic details relating to the company. This process also incurs a small annual fee.
- HMRC must be informed if the company has any profits or taxable income in a company year.
The 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.
Choosing a limited company’s name is also important.
If your company will be a Limited Company, you will need to register your new name with Companies House (or use an agent to do this for you).
The Companies House website includes a great deal of information on company-naming conventions to make sure that your chosen company name is available and suitable.