Use our 6-step guide to start your limited company
If you’re the DIY type, chances are you’ve considered setting up a limited company on your own. But, before you do this, it pays to have your bases covered. Here are six steps detailing how to start a limited company.
- Choose a company name and address
- Register your limited company
- Choose your directors and company secretaries
- Provide details of your shares and shareholders
- Agreement about the Articles of Association
- Sort out your Corporation Tax
1. Choose a company name and address
If you’re setting up your limited company in the UK, the name must end in the words, “Limited” or “Ltd.”
Your company name can’t:
- Share the same name as anyone else on the Companies House names index
- Include a word or expression that’s defamatory (we’ll leave this to your imagination)
- Suggest a connection with government or local authorities
Registering a company name doesn’t mean that your trademark is protected - you’ll need to register your trademark separately.
The address you register is where Companies House and HM Revenue & Customs (HMRC) will send all their communications. It doesn’t have to be where your business is based, but it must be:
- A physical address*
- In the same country where you registered your company
*You may use a P.O. Box, as long as you have a physical address and postal code to go with it. You can choose to register your home address or the address of someone who’ll manage your company taxes, like 1st Contact Accounting.
2. Register your limited company
If you’re planning to start a limited company yourself, the first thing you need to do is register your company with Companies House.
You can register online or by post using the certain forms. If this seems a little too tedious, you can use a professional company creation agent like us .
3. Choose your directors and company secretaries
Choose at least one director who’ll be legally responsible for running the company (this can be you).
Company secretaries aren’t that common in private limited companies, so it’s quite normal to see the role of secretary merged into the director’s portfolio. Keep in mind that the company secretary can’t be:
- The auditor
- An “undischarged bankrupt”*
*You can always confirm whether someone has been discharged by looking at the UK Insolvency Register.
4. Provide details of your shares and shareholders
A statement of capital is a key step in the registration process. You will need to declare:
- The exact number of shares in your company and their total value (i.e. your share capital)*
- The names and addresses of all shareholders (i.e. subscribers/members)
*As the company director, you’re allowed to hold shares yourself.
This is important because the total number of people holding shares in a company will determine how its dividends (i.e. profits) are paid out.
5. Agreement about the Articles of Association
These are the day-to-day rules for running your company. Shareholders, directors and company secretary all need to agree to them.
6. Sort out your Corporation Tax
If your company’s under three months old, you’ll need to give HMRC some specific info once you get your Unique Taxpayer Reference. They’ll then use this info to work out when you need to pay Corporation Tax.
What to tell HMRC:
- The date you started your business
- Your company name and registered number
- Your business address
- The type of business you are running
- The date that your annual accounts will go up to
- Whether you’ve taken over a business or are part of a larger group
HMRC will send a form to the registered address of your company once it’s incorporated with Companies House. This form will tell you how to:
- Give HMRC the exact info they need about your company
- Set up your company’s HMRC online account for all your Tax Returns and Corporation Tax
If you think the DIY approach is right for you, you’ll need to tick all these boxes.
This does take longer than using a consultant such as 1st Contact Accounting and many contractors find it quite frustrating. Forms go missing in the post, call centres are unresponsive, plus you have the responsibility of managing your finances yourself.
That’s why we’ll take care of everything for you. We believe that the everyday running of your business is your own DIY project. But, if you need some help getting your business off the ground and making sure it’s legally watertight from the get-go, we’re here to help.