Limited Companies
How to setup a Limited Company
Before you can begin trading as a Limited Company contractor your company has to be registered with the Registrar of Companies at Companies House.
Your company will be Incorporated which is the process by which a new or existing business is converted into a corporate body.
You can handle the registration process yourself, but it is always a good idea to seek professional advice through your Accountant, Solicitor or via a specialist organisation that will do the work for you for a fee.
Registration Process
• In order to set up a limited company in the UK, you or your agent will need to send several completed documents to Companies House. These include:
• A Memorandum of Association: gives details of the company’s name, location and what it will do.
• Articles of Association: describes how the company will be run, the rights of the various shareholders and the powers of the Company Directors.
• Form 10 (Statement of the First Directors, Secretary and Registered Office): gives details of the company’s registered office and the names and addresses of its directors and company secretary.
• Form 12 (Declaration of Compliance with the Requirements of the Companies Act): states that the company meets all the legal requirements of incorporation.
For companies registered in England, Scotland and Wales, you should be able to download all such forms from the Companies House website which is www.companieshouse.gov.uk
How much will it cost to register my business?
Companies House will charge you a standard registration fee of £20. It also offers a premium same-day registration service for a fee of £50. You will then need to obtain Memorandum and Articles of Association from law stationers or company formation agents, the cost of which ranges from £20 to £30. The cost of having Form 12 witnessed is around £10.
The Company’s Officers
The Company’s Officers are the people who have been formally appointed to run it – the company directors and company secretary. The law requires that the officers are in place at all times and their names and addresses must be on the company’s registration documents. You must inform the Registrar of Companies as soon as there is a change relating to the Company’s Officers.
Taxes relating to a Limited Company
Limited companies have to pay corporation tax on their income and profits. Just as important, if not more so, is the fact that you will need to operate a PAYE system to collect and pay income tax and National Insurance Contributions from your employees and company directors.
The company itself must work out how much corporation tax it needs to pay, using a self-assessment system – your Accountant will do this for you. It’s important to understand how the system works and when your company needs to make returns, in order to avoid penalties.
When you register a new company, the Companies Registrar will pass on the details to HM Revenue & Customs but it is incumbent on you to contact your own local HM Revenue & Customs to let them know your company exists. Again, your Accountant will probably do this for you.
Checklist
Apart from registering your business as a company, the following checklist will help ensure that you put it on a proper legal footing:
• Display your company’s name clearly on the outside of all offices.
• Display your company name clearly on all business stationery, including letters, invoices, cheques and receipts etc.
• Show your company’s place of registration, registered number and registered office address on all business letters and order forms.
• Send all relevant registration documents and forms to the Registrar of Companies, completed and signed.
• Check that you have received confirmation from the Registrar of Companies that your application for limited company status has been successful. Your company comes into formal existence once the Registrar of Companies issues a certificate of incorporation.
• Contact HM Revenue & Customs.
Please note: The above checklist only covers the basics. There are many other tax and reporting obligations and to find out more, click on the following link: www.businesslink.gov.uk
