Setting Up a Limited Company: A Practical Guide
Starting a limited company can be a significant step towards realising your business ambitions. It involves a series of important steps, each of which requires careful attention to detail. This guide provides a straightforward overview of the process, helping you navigate each stage with confidence.
Registering Your Limited Company
The first step is to register your company with Companies House. Here’s a simplified outline to get you started:
Visit the Registration Link: Go to HMRC’s registration page.
Prepare Required Information: Before starting, gather details of all directors and shareholders, including their full names, addresses, dates of birth, and National Insurance numbers.
Proposed Company Name: Ensure your company name is unique. Certain terms are restricted or sensitive, and you can check the list here.
Select Company Type: For most, this will be ‘Private Limited by Shares’.
Choose Your SIC Code: This code describes your company’s main trading activities. You can find your SIC code here.
Registered Office Address: This can be your home address or a third-party service.
Articles of Association: Most will adopt the standard ‘Model Articles’.
Company Secretary: Optional, but useful for administrative support.
Directors and Shareholders: Provide details and designate shares appropriately.
Submit and Pay: Complete the process and pay the £50 fee.
Upon successful registration, you will receive confirmation and your Company Registration Number.
What Happens Next
Once your company is registered, you will receive several key documents:
Company Registration Number: A unique identifier for your company.
Authentication Code: Required for accessing company details on Companies House.
Corporation Tax Reference (UTR): A 10-digit number from HMRC.
These documents are crucial for managing your company’s legal and financial obligations.
Your Government Gateway Account
Create a Government Gateway ID during the registration process. Once you receive your Corporation Tax UTR, log back into your Government Gateway account and add Corporation Tax to your services. This step ensures that all your tax information is consolidated in one place.
Accounting in a Limited Company
Proper accounting is essential for compliance and financial health. Here are some basics:
Record Transactions: Keep receipts and invoices for all business transactions.
Digital Records: Maintain digital copies for at least seven years.
Making Tax Digital (MTD) is an initiative that will eventually require digital reporting for Corporation Tax. Currently, this is mandatory for the reporting of VAT for VAT-registered businesses, and will eventually extend to Corporation Tax, but no date has been set for this yet.
Allowable Expenses and Dividends
Understanding allowable expenses helps optimise your tax deductions. Business-related costs, including travel, stationery, and software subscriptions, are deductible. For home-based businesses, you may claim up to £26 per month for household expenses.
Dividends paid to shareholders must be reported through a Self-Assessment Tax Return. Ensure you register for self-assessment if you receive dividends.
Becoming an Employer
If your business plans to hire employees, including paying yourself a salary, you must register as an employer with HMRC. Detailed guidance is available here.
Essential Checklist for Starting Your Business
Here’s a concise checklist to ensure you cover all bases:
Decide on a Business Name: Check availability before registering.
Register Your Business: Complete the registration process.
Open a Business Bank Account: Do this after receiving your Company Registration Number.
Purchase Insurance: Ensure you have the necessary coverage before starting operations.
Add Corporation Tax to HMRC Account: Do this using your UTR.
Register as an Employer: If applicable, register to pay yourself or others a salary.
Register for Self-Assessment: If receiving dividends, ensure you are registered.
Masterclasses for Business
For those starting out, I offer a range of one-hour Masterclasses for business at £99 each, designed to provide deeper insights and practical tools:
Setting up a Sole Trader Business
Setting up a Ltd Company Business
Creating a Cashflow for Your Business
These sessions will help you understand your responsibilities, key dates, and accounting duties, alongside practical tips for running your business. For more information, visit my Masterclasses https://wendymitchell.co.uk/masterclasses/.
Final Thoughts
Setting up a limited company is a significant undertaking, but with careful planning and the right resources, it’s an achievable goal. This guide aims to demystify the process, providing you with the essential steps and support needed to start your business confidently.
If you have any questions or need further support, I’m here to help.
