Everything You Need to Know to Form a Private Limited Company in the United Kingdom
3E Accounting presents a beginner’s guide to everything you need to know to form a private limited company in the UK.
Private limited companies are one of the most preferred business vehicles for entrepreneurs in the United Kingdom. They offer limited liability, are tax-efficient, and easy and economical to set up. Keen to know more? A beginner’s guide to everything you need to know to form a private limited company in the UK explains it all.
Private Limited Companies or Ltd.
As of 2020, the UK has approximately six million small and medium enterprises (SMEs), and of this, two million are limited companies. Limited companies can be either private (ltd.) or public (Plc). Entrepreneurs usually prefer an Ltd. over a Plc as it is easier and cheaper to set up.
Both types are incorporated by registration with Companies House. Incorporation provides companies with a separate legal identity status. This means the company is a body corporate, can be legally liable for debts, own property and enter into contracts.
Setting up a private limited company in the UK is a straight-forward process with no minimum share capital requirement. It would be best if you start by selecting a unique name for your company. There are strict rules on naming, especially on the usage of characters, symbols, etc. in the name. Using a free online name search tool is the best option for finding a unique name. These can be found at the Companies House website as well as websites of company formation firms such as 3E Accounting.
Next comes the actual registration itself. You will need to fill out specific forms, either online or drop off a hardcopy to Companies House. Along with the registration fee, you will need to include the following information and documents:
- Company Name: which you would have searched for already.
- SIC Code: the Standard Industrial Classification code identifies your company’s type of business. You can choose the most appropriate match from the UK Government’s SIC Code List.
- Registered Office Address: if you don’t have one, firms such as 3E Accounting offer their registered address services for this very purpose.
- Directors’ Information: this is Form 10 and requires names and registered address of all directors in the company.
- PSC: you will need to identify People with Significant Control and list them on your company’s PSC register.
- Company’s Constitution: these are the articles of association and memorandum of association.
- Shareholding: ownership of your company must be listed by providing details of shareholders and the percentage of their shares.
- Form 12: must be signed and submitted to affirm your company complies with the Companies Act.
If everything is up to scratch, then Companies House will incorporate your company within the day.
The next most crucial step is to register with the UK’s tax authority, HMRC. Corporate tax and value-added tax (VAT) is at the current rate of 20% respectively. It is essential to keep accurate financial, accounting and company records. Filling and annual returns must be submitted by the financial year-end. It is also advisable to have some form of audit done for your business, including statutory, non-statutory and forensic.
Do sort out all necessary licenses and permits before you begin to trade. The type of approvals you need will depend on the location of your company and its business activity. Opening a corporate bank account and getting business insurance should also be on your list of things to do. Other matters to consider include renting serviced offices, website design and development, web hosting, etc.
Need more than a beginner’s guide to everything you need to know to form a private limited company in the UK? 3E Accounting is ready to assist with our impeccable company formation services. Contact 3E Accounting today for customisable and innovative business solutions for your every need.