A limited company provides protection against personal liability for Directors and Shareholders. This means that if anything goes wrong, it won’t affect you personally. You’ll still be able to keep your money, and pay off any debts. If you want to employ people, you can do that too. And if your company gets into trouble, you’re protected from losing everything.
You can set up a limited company yourself, or use a specialist firm. But there are some things you must consider when choosing one.
Why create a limited company?
A limited company is a legal entity that allows you to limit your personal liability. This means that if someone sues you personally, it won’t affect your personal finances. If you’re thinking about setting up a limited company, here are some reasons why you might want to do so.
If you run a small business, you could be personally liable for anything that goes wrong. For example, if you hire someone to work for you and they cause damage to property or injure another person, you could be held responsible. However, if you set up a limited company, you’ll still be able to keep your money. You’ll just be liable for the amount of money you’ve invested in the company rather than the full value of what’s been lost.
You’ll pay tax on profits made by a limited company. But if you’re running a limited company as a sole trader, you’ll pay tax on every penny you earn. So, if you make £10,000 per month working for yourself, you’d have to pay income tax on £5,000. But if you’re earning £30,000 working for a limited company, you’d only have to pay tax on £15,000.
Protection Against Bankruptcy
Setting up a limited company gives you protection against bankruptcy. If things go badly for you and you end up bankrupt, you’ll lose everything – including your home and possessions. But if you’re a sole trader, you don’t have much to start again. You could find yourself living in a caravan park or sleeping under bridges.
What distinguishes a private limited company from a public limited company?
A private limited company doesn’t require an annual meeting or a filing of accounts. This type of company can have just one owner, whereas a public limited requires at least 50 owners. Shares of a private limited are not listed on the stock market, while shares of a public limited company must be listed on the stock exchange.
Legal requirements for limited companies
Limited companies are required to have at least one director. A director must file an annual return and provide information about the company’s financial performance. They must also submit their company’s annual accounts to Companies House. Directors must also submit their corporation tax returns to HM Revenue & Customs.
How can I form a limited liability company?
There are many ways to form an unlimited company. This article explains how to choose the best way for you.
A company secretary is usually required. You can find out about what a company secretary does here.
Limited companies must have at least 1 company member who acts as a company director.
Company members include shareholders, employees and contractors. They make decisions together and sign contracts on behalf of the company.
Directors must ensure the company compli es with the law and keeps accurate records.
They must meet regularly to discuss matters such as the company’s finances, strategy and policies.
The board of directors appoints a managing director who runs the day-to-day operations of the company.
The articles of association, which contain the rules governing the company, are filed with Companies House.
Register a limited company yourself
If you want to start a business, it might seem like there are many things to consider. You’ll need to decide whether to set up a sole trader or a partnership firm, what type of entity you’re looking to form, how much money you want to invest, where you want to do business, etc. But one thing you don’t need to worry about is registering your company. This is because you can do it yourself.
You can register a limited company yourself, even if you’re just starting out. In fact, it’s probably easier to register a company yourself than to try to find someone else to help you. And it doesn’t cost anything either.
The process of setting up a company isn’t complicated, and it’s actually quite straightforward. Here’s everything you need to know.
1. Choose the right name
Choosing the perfect name for your company is important. Make sure it’s something that people won’t confuse with another existing business. For example, if you choose “Amazon,” you could run into problems later down the track. If you choose “Gumtree,” you might end up having to pay Gumtree Ltd £500,000 in damages.
2. Find your address
Once you’ve chosen a name, you need to make sure you have somewhere to live. A physical address is required for most companies, including Limited Companies. So, once you’ve got a name, check if there is already a registered office address associated with it.
Using a company formation agent
A company formation agent will manage every aspect of setting up a limited company including registering it, paying the fees and filing the necessary documents. You don’t have to worry about anything except what you want to do with your company.
The agent will take care of all the paperwork, pay the relevant taxes and file the necessary papers. Once the process is complete, the agent will hand over the company to you – ready to use.
What paperwork is required to start a limited liability company?
A Memorandum of Associationism one of the most important legal agreements you make as a company owner. This document sets out the name of the limited company, its registered address, and any other information about it. It also states how many shareholders there are and what their interests are. Shareholders must sign an Agreement stating who owns which percentage interest in the company and what those shares represent, and each shareholder must agree to abide by the terms of the memorandum.
An Articles of Association are required to state how many people are shareholders, what their interests are, and what their rights are inside the company. These articles also define the company’s purpose, the number of directors, the board structure and the role of the chairman. They must be signed by all shareholders.
How to select a registered office location
A registered office address is where you send official documents to. You must provide it to Companies House. If you don’t know what this is, read our guide here.
If you’re looking to set up a limited company, we’ve got everything you need to know about choosing the best name for your business.
What should I do after forming a limited liability company?
The Companies Act 2006 requires every UK company to submit an Annual Return to HM Revenue & Customs (HMRC). This includes information about the company’s directors, shareholders, officers, employees, turnover, profit and loss, assets, liabilities, capital, reserves, dividends paid out, taxes owed, VAT registered number, etc.
Companies Act 2006
(1) A person shall prepare and send to the Secretary of State a return under section 801 within such period as may be prescribed.
(2) If the person does not send the return to the Secretary of State within the period mentioned in subsection (1), the Secretary of State may make it himself.
(3) The Secretary of State may require any person to whom he sends a copy of the notice requiring him to send a return under section 803 to give him a written statement setting out his reasons for not sending the return.
(4) Any person who fails to comply with a requirement imposed on him under this section commits an offense.
Frequently Asked Questions
What is a relevant legal entity (RLE)?
A relevant legal entity (RLE) is a type of corporate structure where there are multiple shareholders owning different percentages of ownership in the same corporation. This allows each shareholder to maintain his/her individual liability while still having access to the benefits of being part of the larger group.
What is a community interest company (CIC)?
A Community Interest Company (CIC) is a type of legal entity that allows people to pool money together into a limited liability company that owns real estate. This structure enables investors to invest in properties without having to worry about losing their entire investment.
The advantages of investing in real estate via a CIC include tax benefits, potential capital appreciation, and diversification. There are different types of CICs, including charitable organizations, cooperatives, housing associations, and social enterprises.