1. Choose the Kind of Limited Liability Company You Want to Create.
There are several types of limited company, each with different advantages and disadvantages. Here we look at some of the most common ones, including sole traders, partnerships, unincorporated associations, and public limited companies. We also take a look at how to set up a limited company.
If you want to start a new business, it might make sense to form a limited company. This type of legal entity offers a number of benefits over a sole trader or partnership, such as tax efficiency and protection against personal liability. However, there are many factors to consider when choosing whether to use a sole trader, partnership or limited company.
The main advantage of setting up a limited company is that it provides much better protection against personal liability for directors and shareholders. A limited company has separate legal entities called “members,” “shareholders” and “partners.” Each member/shareholder/partner is responsible for paying income taxes on his or her profits, while the company itself does not pay tax. In addition, members/shareholders/partners cannot be held personally liable for the debts of the company.
A limited company can also provide significant tax savings compared to a sole trader or partnership. For example, if you’re a UK resident, a limited company will save you about £2,500 per annum in corporation tax. You’ll also benefit from lower rates of VAT and national insurance contributions. If you’re based outside the EU, you could even qualify for zero-rated status.
You can choose from four types of limited company:
• Sole Trader – Also known as a single person company. You can operate the business yourself, or employ someone else to do it for you.
• Partnership – Two or more people enter into an agreement to carry out certain activities together. Partnerships don’t usually involve shares or equity, although you can include one or both partners in the decision making process.
2. Make a decision on the name of your company.
Choosing a name for your company is one of the most important tasks you’ll ever do. You’re creating a brand identity for yourself and your company. A great name communicates what your company does, and helps people find you online. However, choosing the perfect name isn’t easy. Here are some tips to help you choose a name that works for your company.
1. Do Your Research
Before naming your company, make sure you’ve researched the industry. Look up similar companies and see how they named themselves. Check out their logos and branding materials. This research will give you insight into what makes a successful company tick. If you want to learn about the best names for your industry, check out our article on the 10 Best Names for Businesses.
2. Make Sure it Works Online
Once you know what words work well together, start thinking about how your company name might look online. Does it sound like something someone would type into a search bar? Is it catchy enough to catch a visitor’s attention? Does it fit neatly onto a web address? These questions will help you decide whether your name sounds professional and fits nicely on a URL.
3. Pick a Good Domain Name
A domain name is the web address where people go to find your company. For example, if you run a pet store called “Petco,” your domain name could be “petco.com.” When you register a domain name, you’ll pay a fee each year. Registering a domain name early gives you time to think about how your company name will look online.
3. Determine who will serve as the Director, the Shareholder, and the Guarantors.
The Board of Directors are responsible for ensuring that the Company operates efficiently and effectively. They appoint themselves and the shareholders approve the appointment of each director. In addition, the board requires the approval of the shareholders every three years to renew their terms of office.
A shareholder agreement will protect all participants and ensure that everyone understands his/her responsibilities. This document sets out the duties and obligations of the directors, the shareholders and the guarantors.
Meetings of the Board shall be held at least twice annually, unless otherwise determined by the Board. At such meetings, the Board shall consider matters relating to the Company’s affairs including, without limitation, the following:
a. The preparation of the annual report;
b. The preparation of financial statements;
c. The management and control of the Company’s business;
4. Establish a limited liability company.
A limited company is an umbrella organisation which protects directors and shareholders from personal responsibility. This is particularly useful if you want to protect yourself against legal action. If you run your own business, it makes sense to set one up. You don’t have to pay corporation tax, although there are some benefits to registering as a limited company.
If you’re setting up a new business, you’ll probably choose either a sole trader or a partnership. Sole traders are individuals who operate under their own name; partnerships are groups of people who work together towards a common goal. Both types of entity have advantages and disadvantages.
The most important thing to consider when choosing whether to register as a sole trader or a limited company is how much control you wish to exert over your affairs. For example, a sole trader may be able to decide where he/she works, whereas a limited company must be based in England.
There are two main ways to start a limited company: through an existing firm called a ‘trading name’ or through a newly formed company known as a ‘limited company’.
Trading names are companies that already exist, such as Tesco or Barclays Bank. They can be used to trade without having to form a separate company. However, trading names aren’t suitable for every type of business.
Limited companies are different because they require registration with Companies House. Once registered, they become legally binding entities that can hold assets and liabilities.
Companies House charges £120 per annum for each company registered. The cost includes filing fees, annual accounts, and the publication of corporate documents.
5. Finish the Incorporation Procedure
The memorandum of association (MOA), form 10 and articles of association are three documents you must complete in order to incorporate your company. If you don’t know what you’re doing, it’s easy to make mistakes. Here are some common ones we’ve seen over the years.
1. Not registering a trade name
You might think that you’ll never use your company’s trading name, but you’d better be sure. If you do decide to go ahead and use it, you’ll need to register it with Companies House. There’s no cost involved, but it does take up space on their database. So, if you want to avoid wasting money and space, make sure you register your company’s name.
2. Failing to file form 10
This one’s pretty obvious – you haven’t filed form 10. This is a legal requirement, so if you fail to submit it, you could face prosecution.
3. Using the wrong address
Setting up a limited company in the United Kingdom has both positive and negative aspects to consider.
A limited company is a legal entity that exists separate from its owners. This makes it possible to set one up without having to pay corporation tax. You can choose whether to be taxed as an individual or a company. If you are an individual, you can deduct expenses incurred while running the business from your income taxes. In contrast, if you are a limited company, you must include all of your profits in your taxable income.
Setting up a limited company in the UK is easy. All you need is a bank account and a few documents. To start, you need to decide what type of company you want to form – a public limited company, a private limited company, or a charity. Then you need to fill out some forms. Once you have done this, you can apply online.
There are several advantages to setting up a limited company in Britain. One advantage is that you cannot be personally liable for debts incurred by the company. Another benefit is that you can claim deductions for certain expenses. For example, you could claim depreciation on equipment used in your business.
However, there are disadvantages to forming a limited company in the British Isles. One disadvantage is that the company does not allow shareholders to take dividends. Another drawback is that you cannot use the company to buy property. Finally, you cannot transfer shares to family members.
Establishing a limited company—would that be the most beneficial choice for you?
Limited companies are great for people looking to protect their personal assets, or those who don’t want to take on unlimited liability. They’re also a good choice if you want to operate under a different name – like a brand name – without having to register it.
A limited company is a legal entity that exists separate from its members. Members are called “members”, directors are called “directors” and shareholders are called “shareholders”. A limited company is a type of corporation where there are no shares, just members. This means that the company itself owns everything. There are three types of limited companies: public limited companies, private limited companies and unincorporated associations.
Public limited companies must make their accounts publicly available. Private limited companies do not have to publish their accounts. Unincorporated associations are similar to sole traders, except they cannot trade goods or services.
The main differences between a limited company and sole trader are that a limited company requires an annual return, and it is possible to sue a member personally.
Frequently Asked Questions
Do I require a business checking account?
There are many reasons why a limited company needs a business bank account. They include:
• Paying invoices
• Receiving payments
• Managing cash flow
• Keeping track of expenses
• Using online banking
• Monitoring transactions
When may I begin doing business with my new company?
You can start trading through your newly formed Limited Company immediately after it is officially registered at Companies House. This is known as being ‘Registered’. Once you are Registered, you can trade under the name of your company and begin making payments to HM Revenue & Customs (HMRC).
The registration process takes around 2 weeks depending on how quickly you complete the forms. If you want to know what documents you need to provide, check out our guide here.
Once you’re ready to register, you’ll need to fill out the following documents:
• Certificate of Incorporation – This document sets out the rules about who owns your company and who can run it. Your directors must sign this certificate to confirm that they agree with everything written inside.
• Memorandum of Association – This sets out the purpose of your company and explains how it will operate. A board of directors must sign this document to confirm that they agree to the way the company will work.
• Articles of Association – These set out the specific rules about how your company will be run. Directors must sign this document to show that they agree to follow the rules laid down in the articles.
• Deed poll – This confirms that everyone who holds shares in the company has agreed to be bound by the rules contained within the articles of association.