Thinking of working for yourself? While many choose to go down the sole trader route, you also have the option of trading through a limited company. However, before you can do so, there are a number of things you will need to do when setting up a limited company.
Registering Your Limited Company
In order to begin trading, every limited company in the UK must first be registered with Companies House. You can either do this online or by post directly with Companies House or by using a third party. Thankfully, most accountants include this in their service, especially if you are using a specialist contractor accountant.
To register your company yourself, you’ll need to have chosen a company name that is not already in use, have a company address, details of directors and shareholders, and a PSC (persons with significant control) register.
Once you have successfully registered your limited company, you’ll receive a number of important documents such as your articles of incorporation, share certificates, memorandum of incorporation, and certificate of incorporation. The hard copies of these documents will come in hand when you are ready to set up a business bank account for your company.
Directors and Shareholders
Even if you will be trading as a limited company by yourself, you will need to declare who the directors and shareholders are. You can be both the sole director and shareholder of your limited company, otherwise, the directors are the individuals in charge of running the company, while shareholders are those who own it.
You will also need to submit a PSC register if any of the shareholders in your company own more than 25% of shares, or control more than 25% of the voting rights.
Finances and Tax
Once you have registered your limited company, there a number of financial matters that you will have to deal with.
First of all, you have to register for corporation tax, although you have 3 months from the start of trading to do so. You will also have to register for PAYE, even if you will be the only employee of the company. Because limited companies are considered a separate legal entity, you will also have to set up a separate business bank account for your company finances.
Even if you are planning on working for yourself, there are plenty of advantages to operating as a limited company. If you are looking to set up your own limited company, take a look at our limited company accountancy service.