For businesses and startups, it seems that the bureaucratic paperwork continues to grow. As premium small business accountants, we often sit with bemused new business venture owners and advise them on the best route to get through it all.
In our previous blog, Should I stay as a sole trader or register a limited company, we covered the pros and cons. Today we take a closer look at how to set up a limited company and all that it entails for business owners.
Is it a status symbol
Some business owners opt for the limited company route as they hold the belief that their company might be seen as more professional by their customers and others in their industry when they operate as a limited company. It’s often the case that it can make it easier to secure suppliers, investment, and eventually sell the business.
Like everything there is a monetary payment to be made when setting up a limited company, but make sure you avail yourself of our accountancy services, and we can advise you on the not so obvious ones.
The basic cost to register your limited company through Companies House online is a meagre £12, and the fees rise if you do it by post. However if you’re new to the process, you will want to hire accountants in London to help with the paperwork.
It’s a fairly swift process once your correctly completed application is registered with Companies House online, we normally receive a registration number back for our clients within 24 hours. Postal applications can take as long as eight to 10 days, and it’s your choice which way you instruct us to register the business.
The Rules
First thing is that no two limited companies can have the same name, so you will need to think about an original name for your business. For some light-hearted inspiration on choosing a name, why not involve friends and family?
Companies House won’t allow anything offensive, and our accountancy services team will advise you regarding the list of sensitive words and phrases you also can’t use.
In addition we will help check whether your chosen name is available to use as a URL so that you can purchase the domain for your new business website.
You will need to appoint at least one director, however there are no limits regarding the number of directors a company can appoint, as long as they are aged 16 or over.
We can then help you create the PSC register, which is basically telling Companies House, the people with significant control of your business.
Companies House guidelines advise that the register should record people who have more than 25 per cent of shares in the company or voting rights in the company and if they legally have the power to appoint or remove directors. Don’t panic, as highly experienced small business accountants, this is all straightforward for us.
Create your company documents
The final initial steps are to create your company documents, and again we advise you to lean on the expertise and experience of our accountancy services team to guide you and ensure everything meets the legal requirements.
These are:
- The memorandum of association
This document is the legal document that the company’s initial shareholders must sign, agreeing to officially form the company. - The articles of association
This document basically sets out the rules on how the company is to be run, as agreed by all the shareholders, officers and directors.
Then there is record keeping and there are two types of records you need to keep. The first are records about the company and its activities and then of course all of the businesses financial and accounting records, with proof of payments and receipts etc.
Use professional accountants in London for this, as you don’t ever want to fall foul of the regulations.
Companies house advises that you should include such information as the results of shareholder votes or resolutions, documents and details of any loans the company has taken out in its name. Ensure that the details of share transactions and changes in shareholding are recorded, along with anything that is secured against the company’s asset book.
And finally
As a director of a limited company, you have legal responsibilities, including managing accounts and informing other shareholders if you stand to benefit personally from any company transactions.
At the end of your financial year you must report key information to HMRC and Companies House. This is where we really get to work on your behalf , ensuring that you don’t overpay tax or are not subjected to any late fines or irregularity penalties.
With our small business accountants services, you never need to worry about the companies, end of year.
