When setting up a limited company there are a few things that you need to think about. Firstly, you need to think of a company name with a corresponding website, then you need to register your company at Companies House and at HMRC. You then need to set up a business bank account and take out business insurance.
You might wonder why this is important. A name is an easy part. However, you need to consider whether the name you like is available at Companies House and for a company website. You need to consider whether the name you have chosen is easy to remember and does not include any swear words. If you plan on trading in more than one thing, make sure the name of your company name is not restricted.
You can check here for Companies House name availability http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo
For website names, if you search for domain name search, you will be able to find a hosting company with which you can check if the name you want is available. One example is like this:
Register with Companies House
Once you have decided on a name, you then need to register at Companies House. This registration process is when your company becomes officially incorporated. Once incorporated, you will receive a certificate of incorporation and a copy of your memorandum of association by email. You can also download a standard Article of Association which is like your company’s internal rule book.
Information on getting started can be found here: https://www.gov.uk/limited-company-formation
As well as a suitable company name, you will need the following:
- An address for the company
- Details of at least one director
- Details of the company shares
- A sic code which identifies what your company does
- You will also need details of your company secretary if you choose to have one
- Details of any other shareholders with more than 25% shares or voting rights
You can register your company online and it costs £12. You can do this by following this link: https://www.tax.service.gov.uk/register-your-company/welcome
You could also register your company by post by filling out the relevant forms or by requesting an agent or accountant to do it for you. By post, it will cost £40 to register your company. Using a formation agent or an accountant will vary in cost depending on what else they offer.
Register with HMRC
The next step is to register with HMRC. You need to register with HMRC so that you can pay your corporation tax or let them know that you don’t owe anything. When incorporating your company online, you can register with HMRC at the same time. This can be done by following this link as before: https://www.tax.service.gov.uk/register-your-company/welcome
Once registered with HMRC, you will receive a Unique Tax Reference (UTR) number for your company. They will also send you information on when your company tax return (CT600) needs to be filed and paid.
Business Bank Account
If you are a sole trader, this is not so important but once you have a limited company, you are legally obliged to open up a business bank account. By having a separate business account, you have the added benefit of being able to keep your work finances separate to your personal finances. This makes it easier to reconcile your bank and keep track of your income and expenses.
There are many ways to open your bank account, online, by post and by going into the branch. Things to think about when opening your bank account include:
- How much banking will you do online, by phone or by going to a branch? In the latter case, you need to consider how close your local branch is and whether there is an account manager who you can meet with.
- What are the transaction charges and interest rates once the free period is over?
Once you start working for yourself, you need to consider a variety of different insurance. If you are with a professional board, you would need Professional Indemnity Insurance. Once you start a business, you need Public liability insurance and if you have staff, Employers Liability Insurance. You may also need to consider if IR35 legislation would affect you and if you need any further insurance to cover yourself for that.
If this is the first time you are setting up your limited company, you might find it useful to speak to someone to give you an idea of what it involves. Although everything is possible online and by researching on the internet, getting in touch with an accountant can save you a lot of time and money than doing it yourself.
Once your company is set up, you will need to ensure your accounts, tax and annual returns are filed on time. You need to ensure you have enough money saved to pay your tax bills so that you are not faced with a big fine. This too can be passed onto the accountant who can advise what receipts and other information you need to keep and how much to put aside for tax every month.
If you would like any further information, please contact Southside Accountants in Wimbledon.
Written by Nisha Patel – Chartered Certified Accountant and a Tax Expert