There are three types of business structures in the United Kingdom which are sole proprietorship, partnership, and a private limited company. A private limited company is arguably the most popular business structure in the UK.
A private limited company incorporated in the UK under the Companies Act 2006 can be defined as a distinct legal entity separate from its directors and shareholders, the company operates as an ‘individual’ that owns its liabilities, profits, and assets. This can be extended to mean that the shareholders and directors would not be held responsible for the debts incurred.
You are no longer concerned with thinking of a firm name. MCA company name Search can be used to generate a list of available businesses.
How to Set up a Private Limited Company Can Be Explained in 7 Easy Steps:
- Verify if the business structure can be best defined as a Private limited company. Other organisational structures include self-employed or a sole trader, a business partnership, a social enterprise, an overseas company, an unincorporated association.
- Propose a company name that fulfills the criteria prescribed by the government like the name must usually end in either ‘limited’ or ‘ltd’ or with the Welsh equivalents ‘cyfyngedig’ and ‘cyf’ instead. One must check if the name is available, if it’s an already existing trademark, and if it follows the rules for company names under the UK government website.
- Appoint directors or a director but appointing a company secretary is not mandatory. A director is legally responsible for the company’s records, accounts, and performance. Other responsibilities include that the company should follow the company’s rules as defined in the articles of association, keep and maintain the company’s records, file Company Tax Return, and pay taxes after calculation (using a Salary Tax Calculator).
- Establish shareholders and or a guarantor, however, the sole shareholder can also be a director. Shareholders can be considered the company owners and have the power to appoint or dismiss directors, vote on company matters as well as receive dividends based on the percentage of ownership and profit of the company. It is also important to identify people with significant control (PSCs) in the company. A PSC, also known as ‘beneficial owners’ holds more than 25% of shares in the company and more than 25% of voting rights in the company.
- Prepare requisite documents such as a memorandum of association and articles of association.
- Put in place the records you are required to keep, which include records about the company itself and financial and accounting records. Her Majesty’s Revenue and Customs (HMRC) has issued a compliance check for the Company Tax Return.
- Registering as a private limited company. One must check the rules for company addresses, confirm the company’s SIC code and then register the company with Companies House. One has the option of registering for Corporation Tax at the same time or registering separately with HRMC after the registration of the company.
These easy steps ensure that anyone can set up a private limited company provided they follow the simple steps and requirements laid down by the UK government. This process can be done via self on the Companies House online application and is expected to take up to 24 hours. One
can also use the postal application using form IN01 and it can take up to 8-10 days, this can be sped up with an additional same-day service fee.
Reach out to the experts at Vakilsearch to know more.
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