Are you ready to incorporate a limited company or are you transitioning from a sole trader to a limited company? Whichever the case, setting up a UK limited company is the best choice for your business.
A limited company protects you as the owner’s personal assets and it also protects shareholders.
To help you know if you can form a limited company on your own, here we highlight the overview of UK company formation and options you may have to set up your limited company.
What are my options for setting up a limited company?
When setting up a limited company in the UK, you have several options to consider:
1. Do it yourself
You can register your company directly with Companies House. This method requires someone conversant with the registration and legal requirements to incorporate a limited company.
2. Use a company formation agent
Formation agents can handle the registration process for you after you give them all the details for your company. This is the most affordable method since they offer packages that come with additional services to help your company stay compliant after the formation and administration tasks.
3. Hire an accountant or solicitor
An accountant or solicitor can provide comprehensive support, including tax advice and ongoing accounting services. This is the most expensive option.
To help you decide which of these options is the best, we’ll dive into the pros and cons of each but first, let us explore a brief overview of setting up a limited company.
An overview of setting up a limited company
Here is a brief overview of what is needed to set up a limited company.
Chose a company name
Your company must have a name. You should choose a name that represents what your company stands for. You can choose a company name that will make your customers know exactly what your business activities are i.e. what the business does, which industry the company serves or you may simply want your business name to be catchy, and good enough for marketing purposes.
The name you choose should conform to certain regulations set by Companies House. The name must be unique and not similar to the name of another company already present on the Companies House index.
Your application may be rejected if you choose a name that does not meet Companies House regulations. It is important to check if the name you have chosen is available or not using Companies House Company Name Availability Checker.
Also, certain words and expressions need prior approval to be used in a company or business name.
Decide on a valid registered office address for your company
Every limited company in the UK must have an appropriate address, this is after Companies House made it mandatory. An appropriate address is one where official documents can be recorded by an acknowledgement of delivery by the person acting on behalf of the company (director).
P.O. Box addresses are no longer valid, however, the address can be a premises address or a virtual address. You can get a virtual address from a company formation agent who offers a variety of packages with prestigious locations.
If your business is home-based, a virtual address for your company is ideal since it offers the privacy of your home address. You can use a virtual address as your company’s registered address/director’s correspondence address.
Appoint directors and shareholders
Directors and shareholders must be at least 16 years old. At least one director must be a person, other directors and shareholders can be an entity or a corporate body. Directors do not need to be UK residents.
To qualify to be a director, one should not have undischarged bankruptcy and been disqualified as a company director.
A limited company must have at least one shareholder who has the right to vote on company matters. You’ll own 100% of the company if you’re the only shareholder. There’s no maximum limit on the number of shareholders a company must have.
Application
Registering your company can be time-consuming and difficult for people who don’t understand the legal and financial implications.
You can do the application online on Companies House website but make sure you have all the necessary documents. If you miss one, your application may be rejected.
Additionally, you can use a UK limited company formation agent who knows and understands the process and can navigate smoothly.
Setting up a limited company with a company formation agent
The process of registering your company can be full of formalities and overwhelming, especially if you are not used to the legal and administrative steps involved. This is when a company formation agent can be useful.
They know the process and everything needed by Companies House, and they make the process simpler, quicker, and smoother from as low as £50.99 inclusive of Companies House fees.
They also offer additional services that are beneficial to your company such as;
· Business address to register your company if you do not have one. The address also offers privacy by protecting your home address. This is the address Companies House and other government agencies will use to send official notifications and all communications.
· VAT registration services.
· Free website builders and domain names.
· UK business bank account.
· Virtual assistant that supports your company’s day-to-day running.
Setting up a limited company with a solicitor
Using a solicitor to form your UK limited company is the most expensive method to use if you are starting a business but useful for businesses in complex situations.
If you plan on setting up a company with multiple directors or shareholders, a solicitor can be useful. They help in drafting shareholders agreements which helps in protecting your business in case a disagreement with shareholders or partners may happen in the future.
Solicitors can help you to cover all legal areas of your business even if you do not use them to form your company.
Can you form a limited company on your own? You can certainly form a limited company on your own but you have to be familiar with the legal requirements. If you are transitioning from a sole trader to a limited company, there are a few extra steps to follow afterwards that company formation agents can help you out if you are not aware of them.
If you are looking to form a limited company, BusinAssist have international business support solutions that provide support to startups, small to medium sized businesses, corporations, and also large multinational conglomerates.
For more information, contact them on info@businassist.com.
Also Read: How to Form a Limited Liability Partnership?
