All About Limited companies
Being a limited company offers several advantages to small businesses in the UK. Firstly, limited liability protection is a key benefit. The business owner's personal assets are safeguarded, ensuring that their financial risk is limited to the company's capital. Limited companies also enjoy a higher level of credibility and professionalism, which can attract more customers and business partners. Additionally, the tax advantages are notable, with potential for lower corporate tax rates and more flexible profit distribution options. Lastly, as a separate legal entity, a limited company can continue operating even if the owner changes or passes away, ensuring longevity and business continuity.
Setting up a limited company in the UK involves several key steps. Here's a general overview of the process:
Name and Structure: Choose a unique company name and determine the company structure, such as a private limited company (Ltd). Ensure the name adheres to the Companies House guidelines and isn't already registered.
Registered Office and Directors: Select a registered office address where official documents will be sent. Appoint at least one director, who can also act as a shareholder. Directors must meet certain legal requirements, including being over 16 years old and not disqualified from holding the position.
Shareholders:
Decide on the initial shareholders and their respective shareholdings. The shares represent ownership in the company.
Articles of Association:
Prepare the Articles of Association, which outline the internal rules and regulations of the company, including how it will be managed.
Memorandum of Association:
Draft the Memorandum of Association, which states the intention of forming a company and the initial shareholders' agreement to form it.
Company Registration:
Complete the registration process with Companies House. This can be done online or by submitting the necessary forms via mail. The required information includes details about the company, directors, shareholders, and the company's articles.
Corporation Tax and VAT:
Register the company for Corporation Tax with HM Revenue and Customs (HMRC) and, if applicable, for Value Added Tax (VAT). This will depend on the company's turnover and business activities.
Business Bank Account:
Open a business bank account in the company's name to handle financial transactions separately from personal finances.
Compliance and Reporting:
Understand and comply with ongoing legal obligations, such as annual accounts and confirmation statements, and maintain accurate records.
It's worth noting that the process can vary depending on specific circumstances, such as the type of business or industry sector. Seeking professional advice from an accountant can help ensure a smooth and successful registration process.
Tax XL Accountants have set up multiple limited companies for clients over the years and can advise and set up your limited company for you. Contact us for further information at info@xlaccountants.co.uk