| What is a Limited Company? |
| A limited company is an individual legal entity which is separate from that of its officers. A limited company has its own assets, liabilities, profits and losses where the liabilities are limited to the Company unlike a sole trader or partnership where the assets and liabilities of the business are that of the individuals. Limited companies must also submit annual accounts to Companies House these are made available to the general public. |
| |
| What are the advantages of trading as a limited company? |
| Perhaps the most attractive benefit of trading as a limited company is the aspect of limited liability, essentially this protects the personal assets of the officers should the company run into financial difficulties.
Many of the costs and administrative requirements associated with running a limited company are now not much more than those of a sole trader or partnership.
Limited companies instil added confidence in suppliers and creditors, many large organisations will only do business with limited companies.
Finally the ownership of a limited company can easily be divided up through the sale of shares these can be further used as a means of generating capital.
|
| |
| What will I need to set up a limited company? |
| Here is a list of what you will need to set up a limited company using the Company Incorporation Wizard |
| |
|
|
A Company Name. It is possible to register almost any name providing it hasn't been previously registered by another company.
|
|
One Director. An individual who will act as
director for the company. |
|
One Shareholder. At least one person willing to buy a single £1 share in the company. (a shareholder can also be a director or secretary). |
| |
| What is a registered office? |
The registered office is the official address whereby all statutory documents from Companies House will be sent. This address will appear on the public records and must be a full UK postal address and not a PO Box number.
If you do not have an address in the UK or you work from home and would prefer
not to have your residential address on the public record you may like to
consider our 'Registered Office Address Service'. For £99 per annum we can provide a London based address as your registered office, any
statutory mail (Mail from HMRC and Companies House) that is sent to this address can be forwarded to your nominated location.
Click here for more information on the registered office >> |
| |
| What is a certificate of incorporation? |
| The certificate of incorporation is an official certificate issued by the registrar on successful incorporation of a limited company. The certificate states the company number, name and date of incorporation. |
| |
| What are the memorandum and articles of association? |
| The memorandum and articles of association are statutory legal documents that define how the company is regulated and what the company will do. We submit a generic memorandum and articles that are suitable for practically all companies. Below is a brief description of each document: |
| |
|
|
Memorandum of Association |
| |
The memorandum of association defines the following key points: |
|
The company name |
|
The address of the registered office |
|
A statement of limited liability |
|
A statement of the companies authorised share capital and share price. |
|
What the company will do (the objects) |
| |
|
Articles of Association |
| |
The articles of association define how the shareholders and officers run the company. The majority of limited companies adopt a legal table commonly referred to as 'Table A'. This Table is presented as a series of numbered paragraphs and determines such things as how resolutions are passed and the power of directors. |
| |
| Choosing a name for your company |
The name that you choose must be original in the sense that it has not already been registered. You can find this out for free by checking the Companies House search facility. Furthermore the name most not be deemed offensive, or be associated with the government or local authority. Finally there are certain words referred to as sensitive words which also must be avoided in the name.
Click here for information on choosing a name >> |
| |
| What are shares and how do they affect a limited company? |
The purpose of shares is two fold. They provide a means of putting capital into your company, and they also determine the level of control you have over its operations through voting power. Deciding how you divide the shares is vitally important; you need over 50% of the shares in order to fully control the company. It is possible to create a high number of shares in your company but only assign a fraction of them. For example you could create a share capital of 1000 shares with a nominal value of £1, but only assign 100 to the shareholders. This is known as the Issued Share Capital. The percentage of the issued share capital owned by each shareholder determines their interest in the company. On the other hand, if you would prefer a controlling interest in the company you could create 1000 shares but assign only 1 to yourself. You can then grant options over the remaining 999 shares at a later date.
Click here for information on the share capital >>
Click here for information on issuing shares>> |
| |
| How are shares transferred to new investors? |
| The process of transferring shares to new investors is relatively simple. The current shareholder must complete the relevant section of the Stock Order Form and surrender the share certificates to the prospective shareholder. The shares will officially be in the name of the new member once the stock exchange transaction clearing takes place. |
| |
| What are share certificates and what details must they include? |
| Share certificates are paper receipts issued to shareholders for each share purchase made. You must include the following details on your share certificates: |
|
Your company name |
|
The type of share you are issuing |
|
The name and address of the shareholder |
|
The number of shares in words that are to be assigned to the shareholder |
|
The value of the share |
|
A signature from a director and secretary of the company |
| |
| Who can set up a limited company? |
| Any individual of any nationality may register a limited company subject to a few conditions: |
|
They are not an undischarged bankrupt |
|
They have not been restrained by court order |
|
They are not subject to UK government restrictions |
| Click here for information on directors, secretaries and shareholders >> |
| |
| What kind of accounts and records must the company maintain? |
| All companies are required by law to keep a full record of income, expenditure, assets, and liabilities. These records must be kept safe as they will assist you in attending to your duty of returning the companies annual accounts. |
| |
| Do I need to return any documents annually? |
| Yes, you must provide a number of documents following your 'Accounting Reference Date' (ARD). This date is usually the last day of the month your company was incorporated and occurs each year; it is the date that your financial year ends where the accounts are to be made up to. You have 10 months from your ARD to return the following documentation to Companies House: |
|
A profit and loss account |
|
A balance sheet signed by the director |
|
An auditors report (This is only mandatory if your company has a turnover exceeding £1 million) |
|
A directors report signed by the companies director and secretary |
|
Notes to the accounts |
|
Group accounts (When necessary) |
| |
| Do I have to register for VAT? |
| As a limited company you are legally obliged by HM Customs & Excise to pay VAT if the taxable annual turnover exceeds the current threshold of £67,000, or it is believed that it will exceed this limit in the next 30 days. Not all products and services are subject to VAT and in some cases different rates may apply. |
| |
 |
| |
