How to Set Up a Private Limited Company

Sunday, September 1, 2013
Belsize Accountancy in How to set up a Limited Company, UK Contractors, limited company contractors, prescribed particulars

You can set up a private limited company to run your business. You must appoint directors to run the company and register (or ‘incorporate’) it with Companies House.

Once the company is registered you will receive a ‘Certificate of Incorporation’ - this confirms that the company legally exists and shows the company number and date of formation.

What is a private limited company?

A private limited company is:

• a legal entity in its own right distinct from its members (shareholders)
• owned by its members (shareholders)
• run by directors who are appointed by the members (shareholders)
• empowered to do anything contained within its constitution (Article of Association)

Sole traders are personally responsible for their business debts, but the liability in a private company is usually limited to the shareholders. The liability depends on the type of company being created.

• A private company limited by shares means the members’ (or shareholders’) liability is limited to the original value of the shares issued but not paid for.
  
• A private company limited by guarantee means the company members financially back the company up to a specific amount if things go wrong.

How to set up a company

There are many ways to set up a private limited company. The main methods of incorporation are by registering online, by post using an Application to Register a Company Form IN01, or by using an agent (such as an accountant).

Here we will explain how to register the company by post. You should start by completing Form IN01 and send it to Companies House, along with a Memorandum of Association and a copy of the Articles of Association if you don’t use the Model Articles.

1.  Application to Register a Company Form IN01

Part 1 - Company details

This is where you enter the company’s name and its first registered office. You will also need to confirm the company type. Please note that:

• The names of all private limited companies in the UK must end in either ‘Limited’ or ‘Ltd’. Also, the name cannot be the same as any other name on Companies House list or contain a ‘sensitive’ word (such as ‘English’ or ‘National’) or expression unless you get permission from Companies House. 
  
• The registered office address must be where all official communications are sent, such as letters from Companies House and HM Revenue & Customs. The address does not have to be where you operate your business from but it must be a physical address and in the same country as where your company is registered.

 Part 2 - Proposed officers

The proposed officers will be directors and secretaries. The company should have at least one director but a secretary is not legally required anymore. Please note that:

• The director must sign and date Form IN01 and provide their details including their title, full name, country of residence, nationality, date of birth, business occupation, business address and usual residential address.
  
• The secretary (if you appoint one) must also sign and date the form and provide their title, full name and business address.

Part 3 - Statement of capital

This is where the company’s share capital is noted and where the share types and values are entered. The standard class of share capital consists of ‘ordinary shares’ which normally have a value of £1 each share for private limited companies. The company should have at least one shareholder.

Part 4 - Statement of guarantee

This section only relates to companies that do not have any share capital.

Part 5 - Statement of compliance

Each shareholder must sign this form to confirm that all the information entered on the form is correct.

2. Memorandum of Association

The Memorandum of Association is the details of the company’s shares. You must include the name of the company and the names and signatures of all the shareholders. This must be sent with Form IN01 to Companies House.

3. Articles of Association

The company’s constitution is known as its Articles of Association, which is a set of rules for running the company. It is also a contract between the directors and shareholders, which outlines the rules and regulations they must comply to. If you use the Model Articles, then you do not need to submit the company’s own drafted Articles but you should indicate on Form IN01 that you are using the Model Articles.

Once you receive a Certificate of Incorporation, your company is registered (or incorporated) and is free to do what the directors want, such as issue shares and share certificates, open bank accounts, set up your corporation tax, and start trading.

 

Belsize Accountancy will guide you through the complicated and time consuming process of company incorporation, or even save you the time altogether by registering the company on your behalf. For further advice, please contact Belsize Accountancy on 0207 043 0052 or info@belsizeaccountancy.co.uk.

 

Article originally appeared on Belsize Accountancy (https://belsizeaccountancy.co.uk/).