Operating as a Limited Company involves a level of formality and responsibility that simply cannot be ignored if you want to avoid issues further down the line. Getting a grip of the accounting and tax affairs of your Limited Company business needs to start from day one. If such rigour and responsibility isn’t your thing then appoint an accountant or even consider operating via the much simpler structure of a sole trader.
Before we delve into the nitty gritty of Limited Companies it is worth taking a moment to explore the two main types of companies being Private Limited Companies and Public Limited Companies (PLC). The main difference between the two is that a PLC is UK based and is publicly traded although a PLC does not have to be listed on the stock exchange. PLCs cost a lot to operate and have many more regulations to follow than a Private Limited Company which is why private companies are generally the norm (and are the type covered here) for most businesses operating via this type of legal structure in the UK.
How to set up a Limited Company
If you’ve decided to operate your business via a Limited Company you will need to set this up by registering it at Companies House.
Do It Yourself
You can do this directly via the GOV.uk web site or you can use an Agent to do this on your behalf usually via what was traditionally called a Formation House.
The cost of registering the company via GOV.uk is £12. Details can be found at https://www.gov.uk/limited-company-formation/register-your-company
If you go down this route you can also register for taxes whilst you go through the process.
Formation House
The other option is to use a formation house to set up the company for you. They may offer this at a cheaper rate or even for free as they often earn their money from offering complimentary services such as registering a business bank account where they will receive commission for successful account openings. An accountant may also help you to set up your company as part of their services if you do appoint one from the outset.
Whatever route you choose you do need to have some information to hand and you will need to make some decisions at this point.
Name of your company
The first decision to be made is to choose the name of your company. The name must be unique and needs to follow some simple rules such as it cannot be offensive or contain a sensitive word or expression. A simple search of the company register (https://find-and-update.company-information.service.gov.uk/) will tell you if the name of the company has been used. It’s also worth checking to see if the web address would be available and if any trademarks have been registered in the name that you would like to use.
Registered Office
A registered office address is the official address of a limited company. Every company must have and it must be in the UK.
It is the place where Companies House and HMRC will send notices, letters and reminders but it does not have to be the main place of business. It can be your home address although many companies may not want to use an owner’s home address for privacy reasons. So they choose to use a registered office service where you pay a fee to use that address. If you are not using your own address for the registered office you must have an arrangement in place to have mail forwarded from the address that you are using to your home address, or the address of someone dealing with the administrative matters of the company for example an accountant.
Without mail forwarding you will miss important notices from Companies House and HMRC about company matters.
It is imperative that the registered office address is kept up to date and it is your responsibility to do this. If you move, or change accountant, then you will need to tell Companies House, via an AD01 form which can be completed and filed online, that the address has changed.
The change in address reported to Companies House will not automatically update the registered office address with HMRC. You will have to contact the individual department’s within HMRC (Corporation Tax, VAT, PAYE as applicable) to update the registered office address or any other address that HMRC may hold if you move away from that location.
The registered office must be a physical location. This means that you cannot use a mail box number (i.e. PO Box).
Apart from that you can use any address as the registered office, assuming you have relevant permission to do so e.g. if you are in rented accommodation your lease could prohibit use of that address as a registered office.
The registered office can be anywhere in England and Wales. Companies registered in Scotland must have the registered office in Scotland. Similarly those registered in Northern Ireland will have an address there.
When you register your company you will have to give Companies House your home address if you are a Director of the company. To avoid this appearing on the Companies House public record, which anyone can search, you can use a Director’s Service address. This is often the same as the registered office address. Not least for fraud prevention reasons it is a good idea to keep your personal address off the company record and use a Director’s Service address.
Directors
Every company must have at least one director. Directors do have legal responsibilities such as keeping accounting records (https://www.gov.uk/running-a-limited-company).
Historically every company needed to have a Secretary. Not the sort that type letters but an Officer of the company whose core duty is to ensure that the company acts within the legal regulations. There is no longer a legal requirement to have a company secretary for private companies.
Shareholders
Every company must have at least one shareholder (the owner) and at least one share which can be of any value e.g. £0.01, £1.00, £10.00 or any other value.
Note – a company can be limited by guarantee but these are usually “not for profit” entities investing any profits back into the entity for further development.
It is usual in a one person company for the shareholder, who is also the director, to have one share of £1 each. This means that they have to pay £1 into the business at some point and it’s best to just do this on the formation of the company by paying £1 into the business bank account and describing it as “Payment for Shares”.
Person with Significant Control
The concept of a person with significant control (PSC) was introduced so that there was visibility as to who the ultimate owner of a company actually was. It was needed for situations where complex networks of companies are set up to disguise the ultimate owners sometimes because of some sort of criminal intent. For the simplest of companies the concept is redundant but still needs to be followed. So you do need to document this at Companies House and know that a PSC, sometimes called a ‘beneficial owner’, is someone who owns or controls the company.
Formation Documentation
When a company is formed it needs a ‘memorandum of association’ and ‘articles of association’ known as the Memo & Arts or the Formation paperwork. These are lodged on the public record at Companies House and generally set out what the purpose of the company is and what it can and can’t do. These days standard Memo & Arts are used for most simple company formations. Changing these should be avoided unless there is good reason to do so.
If for any reason you feel that your company is non standard and the usual rules of company formation would not apply in your circumstances then it is worthwhile getting tailored advice from an accountant although this generally is not something that you should need.
Public Company Record
Any information related to your company will be available to view on the public record at Companies House. You can see what is listed by searching at https://find-and-update.company-information.service.gov.uk
What to file and when
Knowing what you have to file and when is important in making sure that you meet your regulatory responsibilities and do not end up with a fine, penalty or something worse. To avoid you forgetting about the key responsibilities it is worthwhile setting up annual reminders. Just like the birthdays of family and friends, it’s important to add your key filing dates into your calendar, scheduler or whatever tool you use to remember important events. Here’s a summary of what needs to be filed, when and where:
Summary
| What | Frequency | Who |
| Confirmation Statement | Annually | Companies House |
| Accounts | Annually | Companies House & HMRC |
| Corporation Tax CT600 | Annually | HMRC |
| PAYE | Monthly | HMRC |
| VAT | Quarterly | HMRC |
| Self Assessment | Annually | HMRC |