A Quick Guide for Setting up a Limited Company UK(2021)
4 June, 2021
Although setting up a Limited company in the UK is easy yet especially for non-residents, just understanding the entire process can be hard and time-consuming.
So consider this post as a quick and easy guide that tells you all the nitty-gritty details of setting up a digital limited company, from selecting a company name to the final registration of the UK company.
One bonus tip to minimize the entire hustle is to collaborate with best company formation agents in UK for your company formation.
It also minimizes the cost of cost of creating UK company.
In this context, it is commendable that ltd24ore has already helped 500 digital startups such as businesses of app development, e-commerce and ICT etc., to become successful and profitable.
Without further ado, Let’s get right into the details of how to proceed with United Kingdom company formation.
What is a limited company UK?
The limited company is nothing but a business structure separated from its owners, such as shareholders and directors. It is a kind of entity where sole traders and businesses are on similar designations.
It helps all those people who want to take risks in their businesses and lift the burden of all the liabilities. This is because, in the UK, even a single person, by law, is allowed to establish a limited company.
Pros of setting up a limited company the UK
Sole traders and digital start-ups love ltd co formation these days to enhance their businesses in the UK. Plus, the availability of online company formation packages by service providers makes it possible for non-residents to set up a limited company online.
• Easy eligibility criteria to create company UK
Almost anyone above the age of 16 is allowed to create a company UK. This sort of business structure is quite flexible and feasible for those who want to increase the staff later on.
• Liability over ltd Company
And yes, if you go with UK Company formation, you get the monetary benefits as well. As ltd co. The UK has its own legal identity, and therefore, only the company is liable in times of losses. The owners will only lose what they would invest in.
• Cost Professionalism
Another perk of UK ltd company is linked with expected ‘professionalism’ of the company. For instance, Companies are considered as professional with an ltd tag. Thus, attracts more customers and buyers.
• Saving through taxes
Also, suppose management runs the company efficiently. In that case, your decision of UK company formations can be more effective in tax payments as owners can pay taxes through business profits and pay themselves via salaries and other dividends, and this is not the case with sole traders.
Cons of Setting up a limited company UK
Although it has a lot of benefits with that said there are multiple responsibilities related to it. AS ltd co formation is not much easy to run as its facilities come with major responsibilities. It also incorporates the increased role of legal documentation and registration processes.
• Aligning the business with ltd co formation
Governmental policies require owners to undertake rigorous analysis over the type of their businesses and the specific requirements of their businesses. So, for example, if your business needs are likely to match with that of a sole trader, you might not explore the option of ltd company formation in the UK.
The owners have to go through many phases of legal documentation, such as legal selection of business names and buying trademarks to the final step of UK company registration. The entire process takes quite a lot of time.
• Cost of setting up a limited company UK
The owners have to register the business with UK Companies House.
Moreover, it requires a constant expenditure over efficient business maintenance and management. Such as regular hirings, bookkeeping, record keeping, bank account maintenance, and other management jobs demand some extra pennies from time to time.
• Privacy issues
Also, one big issue with ltd companies is related to the privacy of the company’s data. The private data of the company’s higher officials have to be uploaded on Companies’ House servers which are online, and the data is available to the entire public.
How to set up a limited company in UK(2021)
1. Wait and re-evaluate your need to set up a limited company in UK?
For your UK company formation, the first and foremost thing to do is analyze your business niche’s requirements.
These requirements will decide whether you need to set up an ltd company in the UK or not.
The option of creating a limited company in the UK can be replaced in these four to five situations as described follows:
• Sole Trader
This kind of business structure is feasible for small business owners. Sole traders are individual owners of their businesses who do every job of their company.
Also, they don’t need much paperwork or legal documentation to enter into the entrepreneur’s category. They probably have fewer business responsibilities than ltd co. owner.
• Business Partnership
Think of it as sharing all the business responsibilities with your partner, be it business losses or bank loans for the ltd company.
Along with losses, they also share profits emerging from the running business, and due to that, they also have to share the Tax returns.
All you have to do is select the company’s name, nominated partner and quickly register with HM Revenue and Customs.
• As an Overseas Company
Being a non-resident of the UK, while coming from another corner of the globe, you may still want to open a business space in the UK. Maybe because you need another branch of your well-established business through the process of United Kingdom Company formation.
This option is for you, but remember to register with HMRC to ensure Corporation Tax.
• Unincorporated Associations
These are non-profitable organizations such as sports clubs etc. These companies don’t have to pay taxes if they are not making profits.
• Social Enterprises
These are also non-profitable businesses based on charities and donations. These have to follow the rules and regulations other than those of ltd.
The whole point is that before you begin to tick mark the checklist of setting up a UK limited company, spend a significant amount of time analyzing your business’s requirements and then go for ltd co formation.
2. Name your limited company
You may like to name your fashion brand DIOR, but Sorry! You cannot do so if you choose to create a company in UK. This is because the government policies don’t allow the new ltd companies to pick existing names for their businesses.
Try to come up with your own authentic and original name during your company formation in UK.
Along with uniqueness, the company’s name should not be offensive or disrespectful towards community members. And do look out for existing trademarks to keep yours unique.
Does it exhaust you to think of a unique and representative name? You can get consultations from the best company formation agents in the UK. They can help you to name the business accurately.
Among these agents, ltd24ore stands out with its fresh thinking and practical business approach. Therefore, it is a trend to hire the agency from the beginning of your company formation process in the UK.
3. Selection of Company directors and their responsibilities
The company owners can decide on any number of directors, but one director is mandatory to set up a limited company in the UK. However, the director’s age should be above 16, who will carry on legal and financial duties.
These responsibilities involve taking business-oriented decisions, following Articles of association rules, incorporating shareholders in profit distribution, etc. Most importantly, this person has to struggle with the company’s records, bank accounts management and reports any modifications. Filing Tax on Return and pay Corporation Tax can be super struggling, though.
It is a kind of One-Man show if there is only one director in your company. And if the director commits a human error in these jobs, strict governmental penalties will be on his/her way.
Thankfully, ltd24ore helps your limited company formations by placing the responsibility of all these tedious tasks on their top-rated Tax Consultants and other experts.
4. Shareholders and their shares
Generally, to register UK companies, there is no upper limit on shareholders’ selection, but yes, at least one shareholder is necessary. A Shareholder and a director can be the same as well.
During the phases of a limited company’s formation, you need to give information regarding the distribution of shares among shareholders. For instance, the ltd company has to share the total number of shares and their accumulative value. Also, shareholders’ personal details must be provided during the creation of the ltd company in the UK.
Who is a Person with significant control over ltd co. in Uk?
People with Significant control are the ones who can exercise influence within your limited company.
The Companies House requires you to provide details about these people while you set up your ltd company.
They can have more than one-third of shares in the company or voting rights of more than 25%. Also, they can be influential enough to appoint directors of the limited company.
5. Documentations over setting up a Limited Company UK
Documentations are an essential part of a company’s creation. These inform the actual structure of the ltd company.
For instance, UK company registration requires the memorandum of association that is the agreement of shareholders over company formation.
The Online company formation processes automate this agreement.
And articles of association are explicit rules to run the limited company after the creation of the UK’s company.
The Shareholders and directors give their consent to these rules in these documents.
6. Record keeping of a limited Company UK
It is the most sensitive part of your company formation’s process, as it involves heavy legal penalties in case of failures. Therefore, the director must stay vigilant in handling the company and Bank account records.
Otherwise, the penalty of £3,000 or disqualification is expected for the director.
The company records are detailed records of company personnel including directors, shareholders and company secretaries, etc. These records are basically composed of different voting results of the ltd co., company loans, losses, and much more.
The accounting records consist of monetary transactions of the limited company in the UK and abroad. It also entails information regarding company assets, debts, stocks and product supply, etc.
Filing a Tax Return at the end of the year also requires the maintenance of all these records because it is calculated from the data of these records.
Accurate bookkeeping and record keeping are a must for running a successful limited company.
The company director hires specialized agents for the job to avoid failures and penalties. And as discussed earlier, how ltd24ore can help you secure this sensitive job.
The specialists at ltd24ore not only maintain these records but also keep you updated about any possible issues and further suggest highly practicable business solutions.
7. The company Registrations
Lastly, it’s time to register the limited company with Companies House that requires an official address of the company’s office and SIC code to tell Companies House about your business’ nature.
However, if you choose ltd24ore for assistance in the registration process you can get a complete package of services for setting up a limited company in the UK, at super exciting rates.
So why should you struggle in lengthy and tedious processes of Company formation?
You can open an online UK company in London through our ltd24ore.com service.
Here are the advantages of opening a company in London with ltd24ore:
- online constitution without a notary;
- online accounting, bookkeeping, and tax management service;
- preparation of company accounts and the tax return filing included;
- free access to accounting software based on artificial intelligence;
- assistance via chat, e-mail, telephone;
- consultancy with tax consultants.