When it comes to setting up a limited company, the government makes the steps very clear:

  • Select your directors and secretary
  • Register shareholders and/or guarantors
  • Prepare all necessary company documents
  • Identify your record-keeping practices
  • Register a company name

There is a lot of information available on the very basic process of starting up your business, but what do you need to be thinking about beyond these steps? Mint Formations looks past the fundamentals of how to set up a limited company and explains some of the finer details:

What Do I Need to Set up a Limited Company?

Critical to setting up a limited company is a company name. Many people spend a lot of time thinking about branding and for good reason; branding can be a vital tool for growth and customer acquisition. However, choosing the wrong name now isn’t the end of the world. You can change your business name later if necessary. The most important thing to note is that your name must be unique. Companies House has a name checker that allows you to make sure your business name is available.

You’ll also need to register this name to a business address. This can be your own home if you don’t have a business property, although virtual office addresses are available if that doesn’t sound like an option you want to consider.

Further to this, you’ll also need a series of official business documentation. These include:

  • PSC Register — A PSC Register is a record that details all “People of Significant Control” within your company. It ensures Companies House is aware of who has the right to make decisions about the business.
  • Articles of Association — Articles of Association are essentially your business rulebook and policy. They govern how your business will be administered and outline the rights and powers of individuals within the company. They are not to be confused with workplace policy, which would dictate elements like behaviour and workwear. Articles of Association are business governance documents. You can use standard template documents if you don’t have specific business actions to cover, so don’t worry about this being a complex process.
  • Memorandum of Association — A Memorandum of Association is a signed declaration by anyone involved in the initial formation of the business that they consent to become a member of the company and agree to the responsibilities entailed.

Can I Set up a Limited Company with One Person?

When you register a limited company, you must establish who the directors of the business are and who the shareholders are. There must be at least one shareholder and director. However, these can be the same person. There are no restrictions on how many people can work for a limited company. You can have one or one million. This means that if you want to establish a business where you are the sole individual working within the company, you are more than able to do so.

How Long Does It Take to Start a Limited Company?

The quick answer here is that it is all relative.

The registration process can be very fast. If you opt to register online, as most do, your business will likely receive certification for trading on the same day. Getting in early is more likely to see same-day registration. A team at Companies House will manually review your documents of registration, which means they are restricted to working hours. If you submit your application out-of-hours or late in the day, it is unlikely to be reviewed until the next working day. That still means you will likely see your company officially formed within 24 hours of submission.

However, if you have decided only today that you would like to set up your business, you will have to make all the necessary arrangements before registration, such as gathering the required documents and choosing a name. At this point, it all comes down to the size of your business. A business with many people involved will take longer to establish than a business with only one owner and stakeholder, who will be able to make decisions independently.

What Taxes Do Limited Companies Pay?

Limited companies will pay different taxes as part of operation than a self-employed sole trader. This is because money enters and leaves the business in different ways. So what taxes is your limited company liable for?

  • Corporation Tax — Corporation tax is paid on all business earnings. Currently, the rate is 19%.
  • Employee National Insurance — When paying income to employees of your limited company, including yourself as the owner, you’ll need to pay towards National Insurance (NI) contributions.
  • VAT — If your business earns more than £85,000 per year, you’ll need to pay VAT on most-all types of profits and earnings. The standard rate of VAT is 20%.

Remember, these taxes are taxes incurred by the business, not yourself as a director. You’ll be required to pay your own taxes on income, including income tax, NI and dividend tax if you take dividends.

 

Mint Formations are specialists in limited company formation in UK. From registering a business name to helping with documentation and tax, get in touch with our team today to find out how we can help you get ready for business success.

 

Want to register your UK limited company today?


Raj co-founded Mint Formations with business partner Andy Tree in 2017. Mint formations is established to nurture small UK businesses and enable exciting new opportunities for quick growth. As a successful entrepreneur, Raj knows how to start and run a business. He currently resides as a board member of seven successful companies across the world. He is best known for founding Integra Global Solutions, specialists in robotics, automation, and business process optimisation.

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