How easy is it to set up a limited company?
Perhaps you like to do things for yourself or you are simply wondering whether a DIY approach might save you some money. You’ll be pleased to know that setting up a limited company in the UK can be a relatively easy and inexpensive process if you have all the necessary information.
The process itself is pretty straightforward and can be completed all online. However, bear in mind that setting your own limited company is only recommended for uncomplicated businesses.
For example if more owners with different shareholding are involved or you need different types of shares, you may benefit from getting professional advice to help you to structure the company correctly.
How to set up your own ltd company
Before you get on the Company House website and click on the link to start the process, you’ll need to do a little preparation.
Choosing a limited company name
- Ensure the selected company is available and complies with the Companies House rules. If you don’t, an acceptable name or a name that requires special consideration might delay or stop your application process.
- If you plan to have a website using the company name in the url, make sure you can secure the domain.
- Search on the internet for businesses with the same or a similar name. You don’t want to end up being mistaken for someone else or worse, end up with a lawsuit on your hands.
Decide on the company director
You will need at least one director to start with but directors can be added or removed at any future point.
- Every limited company must have at least one director. A director may or may not be one of the shareholders of the company.
- Running a limited company means responsibilities therefore if you are appointing yourself, make sure you’re comfortable with the job and its risks.
- You will need names, addresses and dates of birth for each appointed director.
Work out the limited company share structure
Simple limited companies are set up with ‘ordinary’ shares. That means each share represents one vote and shareholders will receive any dividend payments based on the number of shares they own.
- Think about the number of shares you want to start the company with and the price per share. You can choose any price point but it’s best to start with a low nominal amount such as £1.
- You will need names and addresses of all shareholders.
Memorandum of association
- When setting a limited company online, the memorandum of association will be created automatically for you.
- You cannot update the memorandum once the company has been registered.
Articles of association
This is where you need to decide to either accept the standard articles of association provided by the Companies House or write your own. The latter isn’t recommended without qualified help.
Choose the company’s registered address
If you don’t want to use your home address, you can usually use your accountants address or buy a specific registered office service which typically includes managing any post addressed to your company.
Pick the corresponding SIC code for your company
SIC stands for standard industrial classification of economic activities. The Companies House provides a list of various business activities accompanied by a code.
The description of your company's nature of business should correspond with the selected code. Note that the classification of your company may have an impact on its future tax liabilities.
A company can have more than one SIC code and they can be altered in the future.
Documents needed to set up a limited company
The good news is that you won’t have to send copies of any documents by post or otherwise. However, in order to complete the online application successfully, make sure you have the following information to hand:
- town of birth
- mother’s maiden name
- father’s first name
- telephone number
- national insurance number
- passport number
How long to set up a limited company?
If you have the information ready and you have made all the crucial decisions regarding the company name, share structure, etc., the whole process is relatively quick.
Online from start to finish it can be done and dusted in 20-30 minutes. Make sure you have a good internet connection and don’t use your mobile phone.
If you have entered all the required details and there are no issues with your application, you’ll find that less than 2 hours later, you have a limited company. Sometimes it can take up to 24 hours.
How much is it to set up a limited company?
This is the great part. At the moment it’s only £12 if you are setting a limited company directly online with the Companies House.
There are service providers out there who offer to set an LTD for you. However, unless you require legal assistance to issue a non standard article of associations or share structure, it’s unlikely to be of any value. You still have to gather all the required information yourself and then effectively just paying someone to enter in the system on your behalf.
Can anyone set up a limited company?
In principle anyone can set up a company as long as the company has one director who is a real person over the age of 16 years and has never been disqualified from being a company director.
Shareholders or directors of a UK limited company don’t have to be based in the UK.