There is a lot of advice around these days about company formation and business startups, some of which can be quite confusing. This concise guide will go through the basics of owning your own limited company and some of the things you need to consider.
What is a limited company?
Basically there are three main types of business that are recognised by legal and financial criteria:
• Sole trader
• Limited company
• Business partnership
If you are a sole trader or in partnership with someone else and something goes wrong, you can find yourself personally responsible and liable for debts and any costs. However, if you operate as a limited company then the business will be responsible instead, and your personal assets won’t be affected.
A limited liability company can:
• Purchase property
• Incur debts
• Undergo legal proceedings
• Make business deals
The owner(s) are only liable for the amount invested. Any profits or losses pertain to the business, which is liable to pay taxes on any profits. Business directors and employees will pay income tax like any other employed person.
You may be liable to pay debts and not be allowed to be a director of another business if your company fails because you neglected to carry out your duties as a director, so make sure you read and follow all guidelines.
Setting up a limited company
Before you start trading you will need to:
1. Identify the director and secretary which any limited company must have throughout its operation.
2. Choose a name for your company which must adhere to certain restrictions e.g. it must not be offensive, imply anything with criminal intent or be owned by anyone else. The word “limited” or “Ltd” must appear at the end of your company name.
3. Have a UK based office address where you will keep all necessary paperwork and receive correspondence (we can provide this for us if you don’t have one).
Once you have organised these important elements you can then register us who can help you put together the “Memorandum” and “Articles of Association”. This requires you to include details of what your business will do and how your business will operate. We will complete the necessary forms so that you can avoid costly mistakes.
If you have any further queries regarding formation, give us a call on 028 9055 9955 or contact us via our website.