A limited company is a business that has been registered with Companies House and has ‘limited liability’. This means the business is only responsible for assets and liabilities within the company, whereas any personal assets of the business owner/director are completely separate. A limited company requires at least one director, but no longer has to have a company secretary as well. As the legal structure of a limited company is different to a sole trader, there are more rules and regulations to follow, which can be time consuming and costly and it is often advisable to engage an accountant to help manage this.

To read about the difference between a sole trader and limited company and the benefits of incorporating, click here.

First, take into account the cost of setting up a limited company. The cost can vary, but initially it is only £12 to register your limited company directly through Companies House online if you do this yourself, however this price can change. But you will need to be confident that you are setting the company up with exactly the right structure and rules and regulations – this is especially important if you have more than one shareholder. It is advisable to implement a ‘Shareholders’ Agreement’ which sets out all the conditions and ‘what if’ scenarios to protect all the shareholders in future.  (More to come in another blog about Shareholder Agreements!)  You should also think about the costs of the day to day running of the business and the time that the new paperwork and record-keeping will take. You may want to consider hiring an accountant for further business advice and help with filing tax returns, accounts and other legal requirements.

Firstly, you need to choose a name for your business. Your name can not be the same as any other limited company. You will also need to check if the URL for your business name is available, to do this you can check this on domain checker website.

You will need to have the details listed below:

Your registered office is public information displayed on Companies House. This is the official address of the incorporated company or association. This however can be your accountant’s address.

The company director will have legal duties such as making sure the accounts are filed on time and inform companies house of any changes to the company information such as registered office address. The director should always act in the best interests of the company. (see our blog about Directors’ Responsibilities to find out what you are obliged to do as a director) You must have at least one director but there is no maximum number. The details you’ll need for each director are title, first name, middle name, surname, DOB, nationality, occupation, country of residence and address.

The shareholders are the owners of the business and not necessarily the same people as the directors. They provide the financial support to the company and ultimately control how the directors manage the company. The shareholder also receives a percentage of the profits by way of dividends, if these are declared. In small businesses there might only be one shareholder, who is often the same as the director. The details you’ll need for each shareholder are first name, surname, service address, share class and number of shares.

The details you’ll need for the person with significant control are name, DOB, residential address, service/work address, nationality and nature of control which means they hold a certain percentage of the shares. The person with significant control is usually someone who has more that 25% of the shares and voting rights within the company and has the right to appoint or remove the majority of the board of directors.

For the secretary you will need their name, DOB, occupation, nationality, residential address and service address.

Then you will need to prepare a memorandum and article of association. These documents say how you’re going to run your limited company. All your shareholders sign this, agreeing to form the company.

The articles of association are written statements and rules about running the company, agreed by the directors and shareholders.

There are certain records that are legally required to be kept for a certain time period. To understand which documents you will need to keep click here.

Once you have the details you need, you can incorporate your company by going to Companies House online.  If you are not sure how to write the Articles of Association, or any other requirements, it is a good idea to speak to your accountant, or a business solicitor, as these are very important documents.

If you have all your company information ready, registering your company online only takes a couple minutes and usually takes up to 24 hours to process. If you register your company by post, it takes up to 10 days.