What you’ll need to set up a limited company

There are many factors to consider when setting up a limited company; we have compiled a checklist and relevant links to support the process.

You need to check that it’s not already taken – Company name availability checker – Find and update company information – GOV.UK (company-information.service.gov.uk)
That it’s not the “same as” or “too like” another registered company, Companies House will likely reject any application if the name falls within either.
It must follow the rules for naming companies – nothing offensive, no use of the words Royal or Accredited without express permission.
More information here – Set up a private limited company: Choose a company name – GOV.UK (www.gov.uk).

Company directors are responsible for following the company rules set out in the articles of association, keeping company records, filing accounts and tax returns, paying corporation tax, and declaring any conflict of interest to other shareholders.
You no longer have to appoint a company secretary for a small business, but if you want to, they can take some director’s responsibilities over.
More information here – Set up a private limited company: Appoint directors and a company secretary – GOV.UK (www.gov.uk).

There has to be at least one shareholder.
Different classes of shares can be lodged with different rights to votes and dividends.
A PSC can be anyone with voting rights or more than 25% shareholding.
More information here – Set up a private limited company: Shareholders and guarantors – GOV.UK (www.gov.uk).

A memorandum of association is automatically created if you register your company online.
You can either use standard articles of association or write your own to be submitted when you’re ready to register.
More information here – Set up a private limited company: Memorandum and articles of association – GOV.UK (www.gov.uk).

This is where any written communication will be sent to your company, so it must be a physical address.
It must be in the country of your registration, e.g. if you’re registered in England, the registered office must be in England.
You can use your home address but be aware that it will be publicly available.
Small businesses usually use an agent or their accountant, but you must get their permission first.
More information here – Set up a private limited company: Check the rules for company addresses – GOV.UK (www.gov.uk).

This code is used to identify the nature of your business for statistical purposes.
Search the list for the most accurate description you can find.
More information here – Standard industrial classification of economic activities (SIC) – GOV.UK (www.gov.uk).

Company and accounting records must be maintained and retained for potential future inspection.
You can use an accounting firm to keep company records for you, but you must tell Companies House if this is different to your registered address.
Every year, all companies have to complete a Confirmation Statement (also known as an Annual Return) to maintain the company records and notify of any changes.
You must keep records of all financial transactions, including payments made and received, company-owned assets, and dividends paid.
Accounting records are used to submit annual accounts to Companies House and for tax calculations.
More information here – Running a limited company: Company and accounting records – GOV.UK (www.gov.uk).

You can also register for Corporation Tax with HMRC at the same time as registering with Companies House.
More information here – Set up a limited company: step by step – GOV.UK (www.gov.uk).

Start to trade under your registered name.
Open a business bank account – How to open a business bank account – Startups.co.uk.

Tax Efficiency – shareholders can take a minimal salary then top up with dividends from available profits which are not subject to National Insurance.
Anyone can be a shareholder – such as family members who can take advantage of tax efficiencies when dividends are paid and have a share of the business. This is a good option to add a spouse without setting up two different limited companies.
Limited Liability – you are not liable for the business’s debts – your personal assets and finances are protected.
Separate Legal Entity – a limited company is an entity in its own right – it can enter into contracts and has Liability for business actions.
Professional Image – adding Ltd to the end of the company name indicates credibility.
Registration is a fairly straightforward process – you can use sample articles and register online for just £12.
Simple transfer of business ownership – shareholders and directors can change whilst the company trades on.
Business name is protected – nobody can trade under your registered name as another limited company.

More complicated setup – have to be registered with Companies House and HMRC and have rules to adhere to.
Accounting complexities – all transactions must be recorded for year-end accounts and taxation. Year-end accounts have to be signed off by a qualified accountant along with tax calculations and submitted to Companies House within nine months of the year-end.
Information is in the public domain – all your limited company’s information (including shareholders, directors and submitted accounts) is available on the Companies House website.
Cost of administration – accountants, submissions to Companies House, retaining a dormant company name, and closing a limited company all come at a cost.
Funders may ask for a personal guarantee – even though you and the business are separate entities, funders – mainly banks – may ask for a personal guarantee before approving funding.
Shareholders with voting rights can have a say in how the company is run.