A limited company is a legal structure put on an organization to limit the liability undertaken by shareholders of the company. It is one of the most brilliant things to do as a business owner/entrepreneur to set up a limited company. 

With a limited company, you will have access to several benefits you wouldn’t have if you were only a trader, such as legal rights over your business, running your business in a tax-efficient manner, and defining your brand. The best part is that it is pretty easy to set up a limited company. This post discusses four steps to setting up a limited company and what your role as a director includes. Let’s dive right in.

1. Identify the type of the limited company you want

The first step is to identify what kind of limited company you wish to have. There are two main types of limited companies: Private Limited Companies (LTDs) and Public Limited Companies (PLCs). Both limited company types have minimum requirements. 

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To form a Public Limited Company, you would need a minimum capital of £50,000, two shareholders, one company secretary, and two directors. In Private Limited Company, there’s no minimum share capital per se, so most freelancers, contractors, start-ups, and small businesses will opt for it. You can choose to set up the LTD with a minimum share of £1. If you’re unsure how to proceed, it’s best to take the help of professionals to set up an LLC UK and dormant company accounts service.

2. What should the company name be?

This could be the most fun but tricky at the same time. When choosing a new name for your limited company, you have to make sure it is unique, such as the web address. So you might not find an outstanding company name of your choice as over 1500 companies are formed daily. 

Limited companies are usually titled with Limited or Ltd added to the company’s name. For example, Apple Ltd or Apple Limited.

3. Establishing the limited company

Now that you have selected a suitable name for your business, you have to move the bureaucratic part of the formation of the Limited company. The Gov.uk site helps make the limited company building process easy and less time-consuming.

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You should know that you have to input personal and company details to help identify you as the company’s director. Example of the personal data includes:

• You have to input the SIC code (Standard Industrial Classification code) to show what type of limited company you are forming. You can check Gov.uk to find the most appropriate code to use from the Condensed SIC code list.

• What should your registered business address be? You might have to sit and think about this, especially if your company is remote or you are a freelancer. You may want to avoid using your private house residence, so you should find a spot or location that should be registered address 

• You will also have to decide the company’s ownership, the number of shareholders, and how the shares will be divided between them? 

The points mentioned above are the technical details you have to provide, so most of your work is done once you have provided them.  

4. The lasts step: The incorporation process

Incorporation is a critical process as it is the legal process that binds a corporate entity or company. It is the legal process of announcing a corporate entity as separate from its owners.

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The Companies House is usually responsible for the Limited Company’s registration in the UK. Check the website for details on how to go about the incorporation process. However, you need a few essential documents to complete and return to the Companies House to finish the incorporation process. Even better if you have an accountant to handle these for you:

• Memorandum of Association: this may include limited company name, location, business type, and other essential details
  
• Form 10: this includes director’s names, addresses, and registered limited company address
  
• Form 12: In this form, you will find the terms and conditions that state that the limited company is compliant with your Company’s Act.
  
• Article of association: In this document, the directors, shareholders’ rights, etc., are highlighted. 

You will also need a business bank account to run the finance of your limited company. Consider getting business insurance to cover your losses due to accidents and thefts. 

What are your duties as a limited company director?

As the director of the limited company, your responsibilities include:

• Registering the new limited company at the Companies House

• You are to ensure that the annual accounts and confirmation statements are completed and filed every year. 

• In charge of maintaining and submitting records of those who control the company. A person who has control should own more than 25% of the shares in the company or vote right. 

• Follow the rules and ensure everyone else is compliant

Conclusion

In four steps: identifying the type of the limited company you are building, deciding the company name, establishing the little company, and the incorporation process, you have learned how to set up a limited company properly. You are also now aware of the proper documents you need and where to seamlessly and successfully set up the limited company. Good luck!