How to set up a limited company

What are the benefits of setting up a limited company?

There are so many reasons why limited company contracting is such a popular choice for self-employed professionals, and, although there are certainly more responsibilities that come with this route, the pros far outweigh the cons.

Here are a few examples:

• As your business is seen as a completely separate entity to you with its own identity and bank account, there isn’t as much risk as some people may think – for example, if your business were to face any genuine financial difficulty, you wouldn’t be at risk of losing your personal possessions and assets.
• You’ll have more tax benefits – it’s the most tax efficient method of contracting.
• You can claim back on a much wider range of expenses. Take a look at our Limited Company Expenses Guide for more information on this.
• You will have complete control over the direction of your business and career.

Read our Benefits of Contracting page for more upsides for becoming self-employed.

How to set up a limited company

Setting up your own limited company is a straightforward process:

Pick a company name
When it comes to choosing a name for your company, think about words related to your industry or skillset so that people will recognise what your business offers.

There are also certain rules to consider, for example, you need to ensure that the name isn’t already taken (you’ll need to look on the Companies House website to find this out), the name cannot be offensive in any way and the majority of private limited companies must end in either ‘Limited’ or ‘Ltd’.

Choose company roles
A company must have at least one director and they will be legally responsible for running the business, making sure company accounts and reports are properly prepared and money is used wisely.

It’s not mandatory to have a company secretary, but if you do, their role is usually to help with some of the director’s responsibilities.

Shareholders
You will have to have at least one shareholder within the company (who can also be a director) and if there is just one, they will own 100% of the company.

There is no maximum number of shareholders and the price of an individual share can be any value, but each person will need to be paid their shares in full if the company has to shut down.

Register your company
You’ll need to register your company through Companies House – you will need the company’s name and address, as well as the names and addresses of directors, company security and shareholders.

You’ll also need a ‘memorandum of association’, which is a legal statement signed by all shareholders or guarantors agreeing to form the company, plus an ‘articles of association’ – these are written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary.

This process will take around 48 hours and comes with a small fee.

You can form a company with us – take a look at our Company Formation page for more information on this.

If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email jaime.thorpe@dolanaccountancy.com. There’s also the option to contact us via live chat.