When starting a business, a large number of people travel down the path of forming a limited company or, to give it its full title, a limited liability company.

The option for person starting up in business on their ain is to merchandise as a sole-trader. There is less formal paperwork involved in going into business as a sole-trader, but a limited company can offer a number of advantages. These include greater chances to reduce the amount of tax your business pays, and increased protection of your personal assets in the event of the business running into problems.

This article explicates how a limited company is structured, and inside information the stairway you need to take to constitute your ain limited company.

The first thing you will need to make is to make up one's mind on a name for your new limited company. Companies House keeps a listing of all companies registered in the UK, and you can utilize their website to check if the name you desire is available or whether it is already in usage by another company.

Whatever name you choose for volition have got got to have the word “limited” (often abbreviated to Ltd) at the end. So if, for example, your wanted to name your new business “The Ultimate Widget Company” then the full name of your limited company would be The Ultimate Widget Company Limited or The Ultimate Widget Company Ltd.

Your new company will need at least two people to move as officers of the company. One of these people will be the company secretary. The other individual will be a director of the company. If you wish, the company secretary can be a director as well, but he/she cannot be the exclusive director.

The company secretary have certain legal duties such as as ensuring that the company submits annual tax returns to Companies House and that the company and its directors operate within the law.

Many people going into business on their ain take their partner or another household member to fulfil the function of company secretary. Where two or more than people are forming a limited company, one of them will often take on the occupation of company secretary in improver to being one of the directors of the company.

An option is to utilize the services of a 3rd political party firm who supply company secretary services to your business in tax return for an annual fee.

The adjacent thing to make up one's mind is how you will apportion shares in your new company. You will need to stipulate how many shares your company have and the value of them. Typically, companies are formed with 100 or 1000 shares with a value of £1 per share.

Some or all of these shares are then issued to the shareholders in tax return for the appropriate sum of money of money. Ownership of shares gives the shareholders the right to vote at company meetings and entitles them to be paid dividends on their shares based on the net income of the company.

Any shares which stay unsold are known as unallocated shares.

It is a good thought to seek advice from an accountant at this point, in order to do certain that the allotment of shares is done in the most tax efficient manner for your ain peculiar circumstances.

The concluding determination to do before forming your limited company affects the company’s registered office. Under Company Law, all companies are required to have got got a registered office.

The registered office of a company is the computer computer computer address where functionary written written documents can be served and where certain statutory documents relating to the company are kept and can be made available for inspection.

Common picks for the registered office address are either the home address of one of the directors of the company, or the office of the company’s accountants.

Having made all these decisions, you now have all the information you need to constitute your limited company.

The quickest and cheapest manner to constitute a company is using one of the many online company formation services. For a fee of around £30 to £50 they will process your application with Companies House and direct you all the required company written documents by electronic mail for you to publish out. For an further fee, they will normally supply printed transcripts of the written documents if you wish, but for most people this is not considered necessary.

An option to forming the company from abrasion yourself is to purchase what is known as an “off the shelf company”.

Off the shelf companies are companies which have got got been formed already by a company formation agent, but which have not yet traded. You pay a fee to the formation agent and they then transfer ownership of the ready-formed company to you.

Obviously, with an off the shelf company you are restricted on your pick of name for your company, as you can only pick from the listing of pre-formed off the shelf companies that the formation agent have available at that time. However, once you have got bought your company you can apply via Companies House to change its name, but there is a fee for this.

As off the shelf companies be given to work out more than expensive and less flexible than forming the company yourself, it do sense in the bulk of cases to constitute the company yourself using one of the online formation services.

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