So you've chosen to take your firm to the next level by forming a limited company. Congratulations on making a decision that will allow your company to be as tax effective as possible.
The following step, of course, is to register your limited corporation. The whole affair can appear intimidating at first glance. However, with the appropriate information and a little perseverance, you'll be able to figure things out in no time.
To get you started, we've put up this simple guide on how to form a limited corporation in 8 simple stages.
1 - Choose between forming a private limited company and forming a public limited corporation.
In the United Kingdom, there are two sorts of limited companies: private and public. Both are owned by the investors who put their money into them, and both must be registered with Companies House.
However, there are some significant differences between these two sorts of businesses. A public limited corporation must have a minimum share capital of £50,000, but a private limited business has no minimum. There is no need to contact the owners when selling or purchasing shares in a public limited company, but shares in a limited company can only be bought and sold if all shareholders agree.
A private limited corporation is usually the best solution for new contracting enterprises.
2 - Learn about the legal criteria for limited companies.
As a limited business, you must go through a number of legal hoop jumps. The most important is that any limited corporation must have at least one director.
Every company director is expected to file an annual return with Companies House, as well as submit an annual corporation tax return to HMRC. If the business turnover reaches the VAT threshold—currently £85,000 for April 2020—you'll additionally need to register for VAT (and file quarterly VAT returns online).
3 - Make certain you have a company bank account.
It is highly suggested that you have a business bank account if you are functioning as a limited company. Because the company is a separate legal entity from its directors, its finances cannot be handled through your personal bank account.
4 - Select a business name
Choosing a name for your company may appear to be a straightforward task, but there are a few factors to consider:
Remember that your company name will (ideally) be there for a long time, so don't choose something just because it's trendy right now.
Consider how your name will seem as a website URL and as part of a business email address.
Maintain flexibility! You might be specialising in agile IT infrastructure for the construction industry right now, but it's probably not a good idea to make a reputation for yourself on something so specific.
5 - Select your company's directors.
A minimum of one director is required by law for your limited business. If you run your firm on your own, all you have to do is register as a director. If your company has more than one employee, you must decide whether everyone will become a director or whether some will be employed.
A private limited corporation does not require the services of a company secretary.
6 - Select a registered address for your business.
A registered address is required for all limited companies. Many directors will simply use their office or home address, but others will have their company registered at their business accountant's address. This is due to two major factors: To begin, all formal company documentation will be delivered directly to the accountant for processing. Second, by utilising your accountant's information, you can keep your home address out of the public eye, as all limited company addresses are made public via Companies House.
7 - Complete the necessary paperwork for a new limited corporation.
There are three main documents you'll need to fill out before registering your sparkling new business at Companies House:
Association Memorandum
This will include information such as the firm name, the names and addresses of business subscribers, and the location of the registered office.
Articles of Incorporation
You will define the powers and responsibilities of directors, as well as how the company will be run, in this section.
IN01 Form
This form collects information about directors, shareholders, and a statement of compliance.
8 - Form your limited liability business.
Now comes the exciting part. You will be able to register your firm. There are three options for doing this: registering online through the Companies House website, engaging a formation agent to do everything for you, or having your accountant do it on your behalf.
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