Expert Company Formation Services
Starting a new company is an exciting time as you get to see your idea grow from a vision to a business venture. But often, the hardest part about starting a new business is getting out of the starting blocks, with many owners often unaware of how to register a company correctly.
At Spotlight Accounting, our limited company formation service is here to help you start your new company on the right track. You can be sure that you are in safe hands with us, as our team of expert accountants process hundreds of company formations each year.
What is a limited company?
A limited company is a business registered at Companies House and has a separate legal identity from its owners and managers. So in effect, it has its own birth certificate. The owners of a limited company are its shareholders, and the managers are the directors.
It is called a ‘limited company, as the liability of the owners of the business is restricted up to the value of what they have invested into the company (the shares that they own) or what they have guaranteed to the company (i.e. bank loan guarantees).
So, for example, if Jo started a UK limited company with one £1 share and took out a £20,000 business loan that she guaranteed, then the total amount she would be liable for is £20,001.
To qualify as UK limited company, you must have the following:
- At least one director
- Shareholders (where limited by shares)
- Articles of Association (this is the constitution or the bible of what it can do)
Which type of company is right for you?
A UK limited company can be registered at Companies House as one of 7 different company types.
There are:
- Private limited company by shares
- Company limited by guarantee
- Public limited company
- Unlimited company
- Limited liability partnership
- Community interest company
- Royal charter
Most UK limited company registrations generally fall under options 1 and 2.
A limited-by-shares company is appropriate when a company exists to make a profit. Where an organisation or charity is formed for non-profit purposes, then a company limited by guarantee is more appropriate.
Company types 3-7 are more complex, and whilst we deal with these company formations, this is a more specialised area that will need specific advice before setting up your company. Contact us to find out more.
What is the limited company formation process?
The limited company formation process (how you register a limited company) is as follows:
- Choose the company name
The first step is to decide on the company name, which can be tricky as it can not be the same or similar to another registered company. You can search the Companies House register here to ensure your name has not been taken. The company name you choose also needs to avoid potentially misleading words and those that are registered under a UK trademark.
- Choose the company directors (and secretary if required)
A UK limited company is required to have at least one director. There are statutory duties that a director has to carry out, including obligations to Companies House and ensuring annual accounts and confirmation statements are lodged. You can read about these here. Directors will also have to provide a service address publicly available on Companies House, so they may wish to use an alternative address, such as the registered office, rather than a home address.
- Identify the shareholders or guarantor
It is a legal requirement that every UK company needs at least one shareholder or guarantor. This person can be a director as well. In the case of the shareholders, the type of shares being issued and the value and the number of shares also need deciding.
- Identify persons with significant control
Part of the limited company formation will include notification of who the persons of significant control are. These are the people who own or control the company.
- Choose the registered office address
This is the official address where legal documents are sent and are on public record. The registered office does not have to be the same as the trading address – it can be a serviced office that offers address services. A lot of our clients choose to take advantage of our address services so that we can handle the Companies House workload.
- Register your company
Companies House will complete your company formation. To do this, an application and company documents are submitted to Companies House. In most cases, the company formation is completed through an online application.
What documents are required for the formation of a company?
To register a company, the following documents are required to enable the company formation at Companies House:
- Memorandum of Association
This is a statement signed by all the initial shareholders or guarantors agreeing to form the company. Where an online application is made, this is generated automatically as part of the company registration process.
- Articles of Association
This, in effect, is the bible or the rule book. It states what the directors can or can not do and the rights of the shareholders.
- Form IN01
This is the application form with all the information Companies House needs to complete the company formation.
What do I do once my company has been registered?
As well as the company documents above, you need to make sure you have the ‘statutory records. These can include the register of directors, register of shareholders and share certificates.
Once you have all the company documents on the Companies House record, you can open a business bank account. Once your bank account is open, you are ready to start trading.
At this point, the new business can complete its VAT and PAYE registration with HMRC. Most company formations will include automatic registration for corporation tax.
Once your business has registered and started trading, the following requirement for Companies House will be the first confirmation statement and accounts.
FAQs
Is it better to be a sole trader or LTD?
This is down to individual circumstances. A UK limited company gives the owners and directors more protection than a sole trader as there is no limitation on liability.
A sole trader is the same legal person as the business owner, whereas a limited company is a separate legal entity from its owners.
Depending on the profits of the business and your other income, it can be more tax efficient to trade as a limited company.
It costs more to run a limited company as there is more red tape involved, such as completing a confirmation statement and statutory accounts.
Many clients prefer to trade through a limited company as they require limited liability protection.
How quickly can you form a company?
Company formations can be completed on the same day if necessary. However, where a business bank account is needed to trade, this can take a lot longer.
Business bank accounts need to be in the name of the limited company rather than a personal account because it is a separate legal entity.
What taxes do I pay as a limited company?
All limited companies that are making trading profits will have to pay corporation tax.
Other taxes that they may have to pay are:
- PAYE/NI, where payroll is run
- VAT where the business is registered for VAT
How can Spotlight accounting register your limited company on your behalf?
Company formation, on the face of it, can be straightforward; however, it is easy to get it wrong. Having incorporated hundreds of companies, we can help ensure you get it right.
We will need the company name, who the directors and shareholders are and a bit of information about each of these individuals if you are using address services for the directors, shareholders and company secretaries. We will then complete the registration process to set up your company on your behalf.
We do not use company registration agents as we prefer to do it in-house via an online application on your behalf.
Our company formation packages:
Our company formation packages depend on what you need for your business. A basic company formation package will include one individual acting as a sole director and shareholder.
Complex company formation packages may include different share classes and multiple directors and shareholders. At Spotlight Accounting, we want to learn about what your business objectives are so that we can get the right set-up for you at the start.
