What Are The 7 Steps Of Setting Up A Limited Company?
When you’re contemplating setting up a limited company, you might think it’s as easy as going to Companies House and telling them your business name. Unfortunately, it’s not quite this simple.
There are seven steps you need to take before you have a registered limited company.
1. Make sure a limited company is right for you
Each legal structure has its own tax implications, reporting requirements and management structures.
Two of the most common structures are limited companies and sole traders. If you want more information about their differences, advantages and disadvantages, check out our previous post: What do I need to consider when choosing a business structure?
2. Make sure the name you want to use is available
When registering with Companies House, there are rules business names need to adhere to.
There are three main considerations you need to keep in mind when choosing your company name.
- Is it unique? If you want to check whether a company name is unique, use our Company Name Checker
- Has it been used before by a dissolved company? To find out more about the rules of using the name of a dissolved company, check out our previous post: Are there drawbacks of using the name of a dissolved company?
- Does it contain any sensitive words? Sensitive words have been limited for use so that the general public is not being misled by the company name. If you wish to use a sensitive word, you will need to include supplementary evidence with your application. For more information about the use of sensitive words, check out our help guide: The Company Name
3. Choose your directors and company secretaries
A limited company needs to have at least one company director associated with it. However, it does not need to have a company secretary, these are optional.
To find out more about these different roles and who can be appointed to them, check out our post: Directors, Secretaries and Shareholders, oh my!
4a. Choose your shareholders
You need to have at least one shareholder in the company. If you only have one person working within the company, it’s typical that this person is also the director.
When considering your shareholders, you also have to consider the type of shares they will be holding and the different rights associated with them.
For more information about share types and what they mean, check out our support article: Share Classifications.
4b. Identify your people with significant control (PSCs)
Once you know who your shareholders are, you can see who your PSCs will be.
Your PSCs are anyone with voting rights over the company, or who owns more than 25% of the shares of the company.
You will need to keep a register of your PSCs and submit this to Companies House along with your Confirmation Statement.
For more information about PSCs, check out our previous post: People with Significant Control.
5. Prepare your documents
When running a company, there are rules which govern how the company can be run. These are known as the “memorandum” and “articles of association”.
For more information about what’s included in the memorandum and articles of association, what you need to do with them and why they’re important, check out our previous post: What are the Memorandum and Articles of Association?
6. Check what records you need to keep
When you’re running a company, you need to keep certain records in certain ways. Failure to comply with this can result in you being in hot water, so it’s best to know what you need to do before you need to do it.
Your records fall under two categories:
- Records about the company
- Records of accounting and finances
For more information about these records and how they need to be kept, check out our post: What Business Records Do I Need To Keep As A Company Director?
7. Register your company
Now you’ve considered everything you need to have in place for your limited company, it’s time to register it.
You’ll need to choose your official registered address and SIC code during this stage.
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