How to Set Up a Limited Company
Setting up a limited company can feel overwhelming if you have never done it before. In reality, the process is quite straightforward once you understand the steps involved.
Before registering your company, there are several key pieces of information you will need to gather. Once these details are in place, the formation process can usually be completed quickly. At Blyth Accountants, we regularly assist clients with company formations and can guide you through the process from start to finish.
Below are the main steps involved in setting up a limited company.
Choose a Company Name
The first step is selecting a suitable name for your company. It is advisable to prepare two or three possible options in case your preferred name is already registered.
Your chosen name must follow the rules set by Companies House and must not be too similar to an existing company name.
Registered Office Address
Every limited company must have a registered office address within the UK. This address is used for official correspondence from Companies House and HMRC.
Although you can use your home address, many business owners prefer to use a different address, such as their accountant’s address or a serviced office, to maintain privacy.
Directors and Shareholders
A limited company must have at least one director who is responsible for running the company and ensuring legal obligations are met.
Shareholders are the owners of the company. In many cases the director and shareholder are the same person, although family members over the age of 16 can also be appointed as shareholders.
Memorandum and Articles of Association
These legal documents outline the company’s structure and the rules for how it operates. Standard versions are normally provided when a company is formed, although they can be customised if required.
Register the Company with Companies House
To form the company, details such as the company name, registered office address, directors and shareholders must be submitted to Companies House.
Online applications are normally processed quickly, and a company can often be incorporated within 24 hours.
Register for Corporation Tax
Once the company has been incorporated, it must be registered for Corporation Tax with HMRC. This is usually completed shortly after formation.
Open a Business Bank Account
A limited company must have its own bank account, separate from personal finances. This can usually be opened once the company formation documents have been issued.
VAT Registration (If Required)
If your company’s VAT taxable turnover exceeds the current threshold of £90,000, you must register for VAT.
Some businesses also choose to register voluntarily, particularly if they regularly reclaim VAT on business purchases.
Payroll or CIS Registration
If the company plans to employ staff, it must register as an employer with HMRC and operate a payroll scheme.
Businesses operating in the construction industry may also need to register for the Construction Industry Scheme (CIS).
Self-Assessment for Directors
Company directors and shareholders must report dividends received from the company on their annual personal Self-Assessment tax return.
Maintain Accounting Records
Limited companies are legally required to keep accurate financial records. Many businesses use cloud accounting software such as Xero to manage bookkeeping and financial reporting efficiently.
Annual Filing Requirements
Each year, limited companies must submit statutory accounts to Companies House and HMRC. A confirmation statement must also be filed to ensure company details remain accurate.
How We Can Help
We frequently assist clients with setting up limited companies. Many business owners begin trading as sole traders before deciding to incorporate as their business grows.
Incorporating can provide several advantages, including improving credibility, supporting long-term growth and allowing more flexible tax planning.
Some businesses also operate multiple companies within a group structure. We can advise on the most appropriate structure to support future growth and potential business sales.
If you are considering setting up a limited company, we would be happy to guide you through the process and ensure everything is set up correctly from the start.
