Company formation is a common process for new businesses, but it can be daunting to navigate. Would you like help? Let’s talk about what you’ll need and how we’ll do it! We make company formation in UK easy so that you’re free to focus on your business. What are the benefits of forming a limited company?
You will have more protection against personal liability, which means people cannot come after your personal assets if things go wrong with the business. The accounting methods and tax treatments associated with limited companies also offer some advantages over sole trader status or being an employee. It’s usually simpler to raise finance from banks than as a sole trader too.
When you register for VAT, the company can claim it back. This means you don’t pay any VAT until your revenues exceed £75,000 per year. Very small companies with less than £85,000 of annual turnover can fall under the flat rate scheme which charges 20% on all goods and services (very advantageous). You will have more legal protection if somebody is injured while on your premises or using your products.
The only real disadvantages of a limited company are that you will have to pay more tax than as a sole trader or an employee and that you will have to file accounts at Companies House and with HMRC which may not be required for other types of business. However, some limited companies choose to avoid this by registering as a Scottish or Northern Irish company, and having their accounts audited.
You can register a limited company online in around 10 minutes. We charge £119 for this, which includes the first year’s company filing fees with Companies House and HMRC. Alternatively, you can use our sister website http://www.theregisterngo.com to register in Nigeria for just 500 Naira, which includes the first year’s company filing fees with Companies House and HMRC.
How do I form a limited company?
You need to be over 18 years old; not bankrupt or subject to a debt relief order; and have never previously registered a company in the UK. It’s that simple.
You will need to provide a registered address, which can be your home if you live there alone. The name of the company must not be identical or confusingly similar to an existing limited company (this is called “conflict checking”) and you should choose something related to your business. Try and use correct spelling in upper or lower case letters, as this can be confusing.
The company director(s) must have their own bank accounts for the share payments to go into and the dividends to come out of.
The directors oversee how the company is run on a daily basis and make sure it’s profitable. A director may appoint an individual to be a company secretary but this is not compulsory. A director will have personal liability for the debts of the company so it is important that they take good care of business finances. For example, they may want to keep funds in a separate bank account from their own money and ensure that all expenses are paid by direct debit or through invoice. They must not allow the company to be used for personal ends.
The directors will typically provide their name and address, details of a bank account they wish to use for share payments and dividends, and information about their age; nationality; date of birth; occupation; whether they are a director/secretary in any other companies or charities; contact details; and a declaration that the information they have provided is true.
Directors should also decide whether they want to trade in their own name as individuals or through the company so that it appears on invoices as “ABC plc” or “John Smith trading as ABC plc”. This can affect your VAT registration and accounting options.
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How much does it cost to form a limited company?
The government charges a filing fee (currently £15 for most companies or £3 for community interest companies). You will also have to pay an annual charge of £13.50 per director if the company has one or more directors and an annual accounting fee of £12.
Plus you will need to pay the costs of opening a company bank account, for example £3-£6 to apply for a business debit card. The cost of other services, such as professional registration with your industry body, insurance and legal advice should also be factored in.
When is the limited company formed?
When we have confirmed all the details we will let you know. You can then send us the share money, forms and documents (see below) by post or email for signing. We will send back the signed documents and your company’s “articles of association”. These are the rules which govern how your company is run and outline what happens if a director becomes bankrupt or resigns, which are useful to you if you have a large business, for example.
How do I pay the share money?
Your company will require cash or financial assets to start trading and these are known as its “capital” or “share capital”. The amount of share capital must be at least £100 but there is no upper limit although it’s capped at £12 million (this is sometimes known as the “authorized share capital”). The most common way of doing this is by a member of the public (“the subscriber”) buying them from you in return for shares and cash. Sometimes called “setting up a company with friends and family”, this saves having to go to a bank or other lender for a loan.
Before you do this, you’ll need to agree on the share price (known as “par value”) of your shares and any other special terms relating to them, such as whether they are redeemable, have voting rights or carry rights to dividends (these may be given now or at a later date). The subscriber will need to sign a form called the “application for shares” (INC10). Once they have signed this, and you have paid them in full, we will send any supporting documents you need to provide – such as your passport or photo driving licence. You must also confirm that all the information provided is true by signing an affidavit confirming it is correct.
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If you’re looking to start a company in the UK, there are many benefits of forming a limited company. Limited companies can offer more protection for your personal assets from liability and bankruptcy than a sole trader or partnership business structure. Plus, they may be able to attract investors who prefer investing in only one type of entity rather than multiple ones as is possible with partnerships. To learn how to form a limited company here in the UK today, call us at 0800 912 5405! We’ll help you complete all necessary steps so that you don’t have to worry about it yourself—all while saving time and money on legal fees! Contact us now if this sounds like what’s best for your new venture.