Ten Things You Should Know About Setting Up a Limited Company
There are ten things you should keep in mind when you decide to register your start-up company as a Setting up a Limited Company after learning how to set up a business. The following list explains them.
Your business must be registered as a Setting up a Limited Company with Companies House before you can operate as a Setting up a Limited Company. Registering your company can be done directly through an electronic application form, or you can use the services of an established third party.
Whatever method you choose to incorporate your business, you will need the same documents and information to complete the process. Learn the 10 things you need to know about Setting up a Limited Company and you’ll be ready in no time!
1. Choose the name of your company
The name of your company must be unique. It’s also advised not to choose a name that sounds too similar to a brand that already exists, as you may have to change it if a complaint is filed. Your company’s name should reflect your company’s values, mission, and service. Do your research and decide what name to choose.
2. Ensure that your company has a registered address
Your company should have an official address. Despite the fact that a lot of new business owners register their businesses with their residences, it is recommended to have a separate business address. You can use a third-party service, such as an established formations service, or your accountant’s company address.
3. Select a Director
The minimum requirement for forming a Setting up a Limited Company is having one director. However, it is no longer necessary to have a company secretary. Be sure that you have all the details of these individuals to hand when appointing directors, whether it’s just you or you and many partners. This includes names, addresses, nationalities, and dates of birth.
4. Ensure you have the shareholders’ details on hand
Aside from having your company’s directors’ information readily available, you should also note your shareholders’ information, such as their name, address, share class and the number of shares they will own. Also, you must provide three pieces of personal information, such as their town of birth, the last three digits of their phone number, their National Insurance or passport number, their mother’s maiden name, their eye color, or their father’s name!
5. Decide on Your Share Structure
When setting up a limited business, you’ll need to make a decision on how your company’s shareholdings are attributed, such as whether you’re going to solely own your shares or split them with others. It’s important to note that the dividends you declare need to be distributed in the same proportion as the shareholdings. It’s advisable to discuss the most suitable way to set up your share capital with a qualified financial advisor.
6. Record People Who Have Significant Control
It is a legal requirement that all companies keep track of “People of Significant Control” (PSC) – these are people who own 25% or more of a Setting up a Limited Company shares or have voting rights above 25%. All companies must submit an updated Confirmation Statement to Companies House on a yearly basis in order to keep the registrar current.
7. Collect articles of association.
The Articles of Association govern all aspects of running a business, including the powers of directors, shareholders’ decision-making processes, voting rights, and how dividends are distributed. These articles can be used with a “generic document” from GOV.UK.
However, if you choose to use your own amended Articles, you will be unable to incorporate them online – instead, you must submit a paper form (Form IN01).
8. What is a Memorandum of Association?
An Association Memorandum confirms the intention of the initial subscribers to form a Setting up a Limited Company. The document includes the following:
“Each subscriber to this memorandum of association wishes to establish a company under the Companies Act 2006 and agrees to become a member of the company and to purchase at least one share.”
By selecting a checkbox when you register the details of your shareholders online, you verify that they have authenticated the prescribed memorandum of association. There is no need to submit physical documents.
9. Make sure you know your SIC code.
Companies identify their trade or industry by using the SIC code (Standard Industry Classification). There is the SIC code “62012” that identifies “business and domestic software development”, and the SIC code “62020” identifies “IT consulting activities”. It is not necessary to list more than one SIC code to describe your company, but you can include up to four.
10. Taxes are not to be overlooked
If you form a Setting up a Limited Company, you have to register for corporation tax within three months of starting any type of business. In addition, you need to register with HMRC as an employer because, even if you’re the only worker in your business, you are effectively an employee.
When you register your company, you should keep the above 10 points in mind. When feeling overwhelmed or confused, don’t forget that there’s assistance out there, from the assistance of an accountant to organize your financial documents and processes to the assistance of a company that can take a lot of the initial stress off your plate so that you can focus your entrepreneurial mind on your products and strategy.