Limited Company Setup – Important Steps to Follow

Do you know countless entrepreneurs are eager to set up a limited company? One of the main reasons is its business structure, which lets you separate your personal finances from your company’s liabilities. In the long run, this proves quite beneficial as this move protects your personal assets when your company encounters a financial risk. Also, there are tax benefits and more credibility. So let’s go through this blog and learn the steps.

Choose a Suitable Company Name

The next step is choosing a suitable name for your company. It must be unique. It should not be too much like any other name or trademark registered with the Companies House. Also, make sure that your chosen name is not offensive.

Appoint Director/Directors

Yes, when you are setting up a limited company, the next step is to appoint at least one director. Someone who can be held responsible for the management of the company and make sure that it duly complies with all legal obligations. You can be the director too! Otherwise, he can be someone who you think is trustworthy. Make sure that the person whom you have chosen as the director must be 16 years old or even older. Remember you may refrain from appointing a company secretary, especially when you are going to set up a private limited company.

Decide Your Shareholders

While setting up your company, you will need at least one shareholder or guarantor, as most limited companies are owned by shareholders, and these shareholders have certain rights. A company director may require the vote of the shareholders to make any changes in the company.

Remember, a director can be a shareholder of a limited company. If you are the sole shareholder, this will imply that you own 100% of the company. Shareholders can be multiple. A company can have an unlimited number of shareholders.

It is mandatory to provide all the information regarding shares during company registration, including the number of shares, their total value, the names and addresses of all of the company’s shareholders, etc.

Identify People with Significant Control (PSCs)

Next step is to find people who have significant control over your company. So, you must identify people who own more than 25% of shares or more than 25% of voting rights in your company. Most importantly, these PCSs can even appoint someone as a member of the board of directors or remove most of them. To get information on shareholders and their voting rights, you can check your company’s register of members.

Prepare Documents

While setting up your company, the next step will be to prepare the following documents:

• ‘Memorandum of association’, a legal document that must be signed by all shareholders or guarantors who are in the company and have agreed to form the company.
• ‘Articles of association’ that contains all the written rules regarding your company’s operation, to which shareholders or guarantors have consented.

Check the Records to Keep

You must keep a track of all the company records, both financial, and accounting records. Remember, HMRC has the authority to check these records for a compliance check. So, keep these records for at least 6 years from the end of your last financial year.

Register Your Company

The last step will be to register an official address for your company with Companies House and choose a Standard Industrial Classification (SIC) code. It will be this code that will help to identify the area in which your business is working.

Lastly, with careful planning and professional guidance, your company can be a solid foundation for your business aspirations in the UK.