If so, you may be wondering exactly what establishing a limited company entails.
Launching a venture may seem like a fairly simple process on paper, but it can actually be complex and time-consuming.
This is why we strongly recommend working with experienced accountants.
Why hire an accountant to set up a limited company?
Setting up a limited company requires you to tick several boxes and complete a series of processes.
While it is possible to do this without the help of an accountant, hiring an accountant can prove incredibly beneficial.
A good accountant will be able to guide you through :
- Every stage of the process
- Taking care of the to-do list
- Eliminating additional stress for you.
Your accountant will be able to use their experience and expertise to help you make the right decisions and follow the appropriate protocol.
And you should be able to get started quicker and devote more of your time to other tasks at a time when you’re likely to be very busy.
Working with an accountant isn’t just beneficial for setting up a new limited company.
It can also make the job of managing and controlling your finances much easier once you are in business.
Accountants can offer tailored advice to ensure you make the right financial decisions for your company.
Having an accountant in your corner can also free up time for you to focus on core elements of your new business.
Do I need an accountant?
It’s not a legal requirement to have an accountant on board when you set up a limited company.
But many business owners find it incredibly useful to seek advice from an accountant when they’re in the process of establishing a new venture.
An experienced accountant can simplify the steps taken to reach the point where the company is fully registered and ready.
And they can also give you advice, which could save you a lot of time, effort, and money moving forward.
Steps we take to get your business up and running
Setting up a limited company isn’t as simple as launching a new website and printing some branded business cards.
There are decisions to make and jobs to tick off the list.
- The first thing to do is decide whether you want your business to be a private limited company (LTD) or a public limited company (PLC).
- Most commonly, contractors, small business owners, and freelancers opt to go for a private limited company.
- With a PLC, you usually have at least two directors, two shareholders, a secretary and a minimum share value of £50,000.
- Hiring an accountant gives you the option to consult an expert whenever you have questions, and also the chance to focus on other tasks at a time when dotting the I’s and crossing the T’s may be the least of your worries.
Our highly-skilled accountants will help you navigate the processes of choosing which type of company to establish and getting your business set up.
They can also offer advice to help you manage your money effectively and efficiently once you have set the ball rolling.
Company name check
Once you’ve decided on the kind of limited company you’re keen to establish, the next step is to choose a suitable name and check that it isn’t already in use.
It can be fun coming up with ideas and suggestions, but this part of the process can also be frustrating, as you may find that your favourite names have already been taken.
- Your company name needs to be unique.
- If you’re struggling, you may find that you’re able to distinguish your preferred name from a name already in use by adding Limited or LTD to the end.
- You can check any names you’re keen on via the WebCheck service on the Companies House website.
- Figures suggest that there are over 1,500 new companies registered every day, so be prepared to come up with a few options.
Registered vs service address
When you’re setting up your new company, you may come across the terms registered address and service address.
It’s important to understand the difference, as you’ll need to provide both.
All company directors, people with significant control, subscribers, LLP members, and secretaries will require a service address.
This address is the chosen contact address for these individuals and the location they will receive mail from agencies like HMRC and Companies House.
The registered address is the company’s official contact address.
Official government mail will be sent to the registered address.
It is possible to use the same address for your service and registered address.
Company directors, secretaries and shareholders
The next stage involves appointing company directors, a company secretary, and shareholders.
Each company must have a minimum of one director, and many have more.
The director assumes legal responsibility of running the business and ensuring the accounts are in order.
Directors do not have to be full-time UK residents, but they must have a registered address in the UK.
In some cases, businesses also appoint a company secretary.
A secretary can also be a director, but should not be the company’s auditor.
In most cases, limited companies are owned by shareholders.
The number of shareholders can range from a single director to multiple shareholders.
Ownership will depend on how many shareholders there are and how the shares are divided up.
If you’re one of two directors and you are the only shareholders and you have an equal stake, you’ll each own 50% of the business.
When you register a new business, you’ll need to offer information about your shareholders and your total share capital.
This relates to the number of shares owned by each individual, the total value of shares and details about shareholders, also known as subscribers.
If your limited company has 1,000 shares worth £1, your share capital will be £1,000, for example.
People of Significant Control, Articles of Association, Memorandum of Association
To register your limited company with Companies House, you’ll need to complete a series of documents, including:
- Memorandum of Association: this includes details of your company name, location and business type
- Form 10: this includes your director’s name or names and your registered company address
- Form 12: this provides confirmation that your company adheres to terms and conditions set out in the Companies Act
- Articles of Association: this document outlines powers, rights and responsibilities of directors and shareholders
You should also outline People of Significant Control.
This title relates to any individual with at least 25% of the company shares or rights to vote.
Your company will also require a SIC (Standard Industrial Classification) code.
This code is used to describe the type of company.
You can choose more than one SIC code (up to a maximum of 4), but most companies opt for a single code.
The codes are available from Companies House, and you can use the search tool to look for codes that correspond to the type of company you’re setting up.
Register for corporation tax
If you own a private limited company, you’ll need to register for corporation tax within three months of setting up your business and starting to trade.
To register, all you need is your 10-digit UTR (unique taxpayer reference), which will be sent via the mail to your registered address.
Once you have this code, you can register online and HMRC will inform you about relevant tax deadlines.
Register for VAT
In addition to registering for corporation tax, you’ll also be required to register for VAT if your taxable turnover exceeds £85,000.
Once you’ve signed up with HMRC, you’ll receive a VAT number and be provided with advice about paying your first VAT return.
Registering with HMRC
You must register with HMRC if you plan to employ anyone, even if you are the sole director and the only employee.
If you’re registering a limited company in England, Scotland, Wales and Northern Ireland, the same rules apply.
You can register online.
How to set up a limited company for contracting
If you’re keen to set up a limited company for contracting, you’ll need to follow these steps:
- Choose a name for your new company
- Register with Companies House (you can do this online or via post)
- Register with HMRC for tax purposes
- Set up a business bank account
Even if you’re the sole employee, you’ll need to notify HMRC about your new limited company so that you can start paying tax.
If you plan to employ other people, it’s wise to read up on the PAYE tax system and to seek advice from an accountant to ensure your books are in order and that you know when to pay tax and how much to pay.
How long does it take to set up a limited company?
If you have all the information you need to hand, and you know exactly what you need to do to set up your new limited company, the process can be completed very quickly.
It’s difficult to put an exact timeframe on establishing a new company, but you should find that your new business is registered within 3 days of submitting your application to Companies House.
Often, this can be done much faster (within 3-24 hours), especially if you register online.
It’s crucial to make sure that the information you provide is accurate to prevent delays.
This is where working with an accountant can come in useful.
If you’re looking to set up a limited company, and you’d like expert advice from experienced accountants, why not contact Universal Accountancy today?Contact us