What is a limited company?
A limited company is a form of business where the managers (Directors) and owners (shareholders) are legally separate from the business. A limited company must be incorporated at Companies House and will have a unique company registration number.
A limited company is governed by the requirements of the Companies Act and is taxed differently to individuals.
Because a limited company is separate to its owners it can enter into contracts in its own name, it is responsible for its own actions and can be sued, it is entitled to the money it makes from sales, it can keep its profits and it is responsible for paying its on debts and liabilities.
The main reason limited companies are popular is because they benefit from limited liability. This means that if the company fails the amount that the owners can lose is strictly limited. If a limited company fails the owners can only lose the nominal value of the shares they hold plus any amounts they have invested in the company or underwritten with a guarantee.
Why do I need a limited company?
Many businesses incorporate to benefit from limited liability and being able to operate under limited company taxation and pay corporation tax. It does not always make sense to go down this route and expert advice should be sought. Sherwin Currid are experts in limited company formation and would be delighted to discuss your specific situation and advise.
How do I form a Limited Company
The actual process of forming a limited company is straightforward. However you may want to discuss the structure of the company you want to form such as shareholders, share capital and directors. The key steps involved are:
Choose a name for your company
Always a difficult decision! You cannot use a name already in use and there are some restrictions around names. You can check a names availability on the Companies House website
Decide on your company address
You will need a registered office address as well as a trading address for your business. You could use your home address or business premises if you have them. Alternatively Sherwin Currid can provide you with an address to use for your business.
Choose the company directors, Share structure and shareholders
This may be a straightforward decision or you may require advice to ensure that you are set up in a tax efficient manner. Sherwin Currid advise many clients on the most appropriate structure for their company. If you require help please get in touch and we would be delighted to help.
Set up at Companies House
Once all the decisions have been made the limited company formation information can be submitted to Companies House for the official registration to be made.
Next steps after forming company
Once the company is officially formed and you have a certificate of incorporation then you can proceed and set up a bank account for the company, register the company for VAT and also take out any insurances that you need.
Contractors and Limited Companies
Most contractors operate through limited companies. Operating in this way offers limited liability protection and also tax efficiencies. In addition most companies prefer to engage with contractors in this way because if they do not there can be major tax implications because of the IR35 legislation.
Sherwin Currid looks after many contractors operating through limited companies and help clients gain maximum tax efficiencies whilst operating in a fully compliant way.
Sherwin Currid are experienced company formation accountants, and will help you set up and structure your limited company correctly.