What is a limited company? This is a type of business structure where a company is considered to be legally distinct. An appropriate business structure will enable your company to be formally acknowledged and provides guidelines as to how the business should be run.
A limited company recognises the business as a separate legal entity to its owners, making shareholders liable only for the amount of share capital that they have subscribed to.
What does it mean to register as a limited company? Read on to find out more…
Types of limited companies
There are two kinds of limited companies:
Private limited companies: this is one of the most common set-ups for small businesses where shares cannot be offered to the general public.
Public limited companies: often referred to as PLCs, can raise capital by offering shares to the general public to a value of at least £50,000 and is a common structure for large, established businesses.
Setting up a limited company
How to form a limited company can be done by following these key steps:
- Choose a company name
- Assemble all information needed to set up your company
- Prepare your company’s memorandum and articles of association
- Register with Companies House (known as incorporation)
What to provide for registering as a limited company
You’ll be able to register your limited company online or by post. You’ll need to provide:
- The full registered business name and address of your company. This can be your name or something unique to your business. This business name should then be used on all official correspondence.
- The designation, names and addresses of all directors, and the company secretary if you have one.
- Details of shareholders and capital.
What to do next
Once your limited company is incorporated you must register for corporation tax. You’ll be fined if you don’t do this within three months. You may also have to pay other taxes such as VAT, PAYE, and National Insurance contributions, Capital Gains tax, and Corporation tax.
Advantages of operating as a limited company
The main advantage is limited liability is afforded to the owners. It can also:
- Give your business the appearance of credibility and prestige
- Provide greater tax efficiency
- Offer wider options for raising finances
- Be straightforward to bring other people into the ownership of the business
- Be easier to sell shares to others if you wish to leave
Ongoing responsibilities
A limited company must file accounts with HMRC ad Companies House each year, so you must maintain appropriate records of all sales, purchases, and any other payments. You must also keep a range of statutory registers which shareholders can ask to look at:
- Register of Members
- Register of Directors
- Register of People with Significant Control
Records of meetings of directors and shareholders will also need to be taken and kept. And every year a confirmation statement must be filed with Companies House.
Get outsourced bookkeeping
A company registration service in London will be offered by qualified accountants to keep the registration process as simple as possible for you. You’ll get help with decisions on the types of liabilities your business should have, and the pros and cons of incorporating as a limited liability company. Expert assistance will be provided with all mandatory company registration procedures and with your incorporation certificate.