UK limited company (Limited by shares)
When you set out to register a company, you’ll find that the most common form of company is a private limited company by shares. This is when the company is owned by the shareholders, so there must be at least one shareholder to take at least one share upon incorporation.
The shareholders appoint directors to run the company. It is not uncommon in a small company to have one shareholder who is also the sole director. They may also be the sole shareholder, owning 100% of the business.
There are three advantages of being incorporated as a limited company:
Tax
Generally speaking, a business owner may be better off financially to incorporate as a limited company than as a sole trader. Dividend taxes can be lower than self-employed taxes and national insurance.
Liability
Unlike a sole trader, a limited company director or shareholder is not liable for the debts of a company unless they have wrongfully traded or have a personally guaranteed debt. The liability in general (for example, work completed) is also limited to the company and not the individual director or shareholder(s).
Professionalism
A limited company has a company number and is listed on the register of companies, which the public can view. This gives your business clout and can help you be perceived by other businesses — such as those you may work with — as more professional. This can also help you secure more significant business contracts; larger enterprises are more likely to work with a limited company than a sole trader.
What are the annual requirements of a limited company?
A trading company must file the following every year:
- A confirmation statement (to confirm information held about the company and update the persons of significant control register)
- Accounts and tax returns to HMRC and Companies House
A non-trading (dormant) company may only file dormant accounts with Companies House and is not required to file a tax return with HMRC .
What must be on an application to register a limited company by shares?
A limited company must have at least one director, one shareholder (this can be the same person) and a registered office address in the United Kingdom (this cannot be a PO box). A company must also confirm its trade through a “SIC code” and list those who are persons of significant control (e.g., owning 25% of the shares directly or indirectly). (this cannot be a PO box). A company must also confirm its trade by way of a “SIC code” and list those who are persons of significant control (e.g. owning 25% of the shares directly or indirectly).
How do I set up a limited by shares company?
To set up a limited by shares company, you must register your business with Companies House. You can use our online service to do this, where we will register your business on your behalf and take care of all the paperwork. Over the years, we have honed our registration process to ensure that your registration goes through quickly and without a hitch. Our process is as follows:
Step 1: Checking Your Company Name
If you’re looking to register a limited company in the UK, you must choose a company name. Unlike registering as a sole trader, your business will be a separate legal entity to yourself and so needs a separate legal identity.
You must take your time choosing a name as it will have a massive impact on your brand identity. You can change your business name at a later date, but this can cause confusion. When choosing your business name, there are a few important things to do:
- Find a name that’s easy to pronounce and spell
- Don’t limit yourself by being too specific
- Don’t choose a name that’s too similar to an existing company.
Once you have your business name, you must check the name is available before moving on to the next step.
Step 2: Choosing Your Shareholders and Directors
Once you have your business name, you’ll need to work out who will be running your company. Limited company registration requires the details of all business directors and stakeholders from the start of your business. You will need at least one director and one shareholder to start your business. If you choose, these can be the same person, but you can appoint as many as you choose.
Step 3: Putting Together Your Company Documents
- Memorandum of Association
- Articles of Association
These documents essentially outline how your company will run and who will be involved. As part of our limited company formations package, we will handle creating these documents, and all you’ll need to do is agree to them.
Step 4: Registering Your Business
After following the steps above, we will have all the business information and documents to process your registration with Companies House. We can process your registration quickly and have you set up in three to six hours, and the registration fee is included in our packages. Once everything is complete, we’ll send you all of your formation documents and ensure that you and your shareholders understand everything.
