There are two types of limited companies: Private Limited Companies (LTDs) and Public Limited Companies (PLCs). You will learn more about these different types of limited companies below.
1. Select the Type of Limited Company to Set Up
When starting the process of setting up a new company in the UK, you first need to decide what type of limited company you want to set up. If you are setting up a limited company in the UK or you have a small business, you’re a freelancer or a contractor, the most popular route is a private limited company.
2. Choose a Name for your Company
The second step for setting up a limited company is choosing its name.
Choosing a name for your company can be fun but challenging, just make sure you are happy with the name you’ve picked, it will appear on your building, vehicles, website and paperwork.!
3. Choose a Director, Shareholder and Guarantors
Now you have a name and trademarks, the next step to set up a company in the UK is to appoint a director. You also need to consider who the shareholders or guarantors for your company are.
4. Set up your Limited Company
The next step is opening a limited company in the UK. You need to provide details such as:
- What type of business your limited company will be. This is done by providing a SIC (Standard Industrial Classification) code for your business.
- Addresses you wish to register for your business.
- The ownership of your company, the number of shareholders and how many shares they will have.
5. Finish the Incorporation Procedure
The Incorporation Procedure is finished by submitting the following documents to Companies House (the company which is responsible for limited company registration in the UK). These documents lay out how you are going to run your business:
- Memorandum of Association: it is a legal document signed by all your shareholders agreeing to form the company. It involves your limited company name, location and business type.
- Form 10: includes the director's names, addresses and registered limited company address.
- Form 12: states that the limited company in question complies with the terms and conditions of the Companies Act.
- Articles of Association: written rules about running the company, agreed by the directors and shareholders.
The Advantages and Disadvantages of Setting a Limited Company in the UK
There are advantages as well as disadvantages of setting up a limited company in the UK.
Also, limited companies have more prestige and professionalism in the business world, making them more likely to attract business and clients.
One disadvantage of a limited company is that they can be complicated to set up, as they need to be registered with the Companies House (find more information at the Companies House Website). You will also need to pay to set up a limited company.
Is setting a limited company the best option for you?
Reading this blog post, you may be wondering if setting up a UK limited company is the best option for you. Some examples of limited companies include plumbers, hairdressers, photographers, and construction companies.
LawBite has teamed up with Tide
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Tide is offering:
- Free company formation & registration
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- £100 credit to the new account
You can get legal assistance from LawBite
LawBite’s mission is to democratise how SMEs get the expert law they need - easier to access, clearer to understand, and much more affordable. We connect you with the best lawyers to give you top-class legal advice. If you were wondering how to set up an Ltd company or have questions about your business structure, we hope this blog has been helpful in addressing the steps involved in going about this, as well as the advantages and disadvantages associated.