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How To Form a UK Limited Company

When starting a business, a large number ofgives the shareholders the right to vote at
people go down the route of forming a limitedcompany meetings and entitles them to be paid
company or, to give it its full title, adividends on their shares based on the
limited  liability  company.profits  of  the  company.
The alternative for someone starting up inAny shares which remain unsold are known as
business on their own is to trade as aunallocated  shares.
sole-trader. There is less formal paperwork
involved in going into business as aIt is a good idea to seek advice from an
sole-trader, but a limited company can offeraccountant at this point, in order to make
a number of advantages. These include greatersure that the allocation of shares is done in
opportunities to reduce the amount of taxthe most tax efficient way for your own
your business pays, and increased protectionparticular  circumstances.
of your personal assets in the event of the
business  running  into  problems.The final decision to make before forming
your limited company involves the company's
This article explains how a limited companyregistered office. Under Company Law, all
is structured, and details the steps you needcompanies are required to have a registered
to  take  to  form  your own limited company.office.
The first thing you will need to do is toThe registered office of a company is the
decide on a name for your new limitedaddress where official documents can be
company. Companies House maintains a list ofserved and where certain statutory documents
all companies registered in the UK, and yourelating to the company are kept and can be
can use their website to check if the namemade  available  for  inspection.
you want is available or whether it is
already  in  use  by  another  company.Common choices for the registered office
address are either the home address of one of
Whatever name you opt for will have to havethe directors of the company, or the office
the word "limited" (often abbreviated to Ltd)of  the  company's  accountants.
at the end. So if, for example, your wanted
to call your new business "The UltimateHaving made all these decisions, you now have
Widget Company" then the full name of yourall the information you need to form your
limited company would be The Ultimate Widgetlimited  company.
Company Limited or The Ultimate Widget
Company  Ltd.The quickest and cheapest way to form a
company is using one of the many online
Your new company will need at least twocompany formation services. For a fee of
people to act as officers of the company. Onearound £30 to £50 they will process
of these people will be the companyyour application with Companies House and
secretary. The other person will be asend you all the required company documents
director of the company. If you wish, theby email for you to print out. For an
company secretary can be a director as well,additional fee, they will normally provide
but  he/she  cannot  be  the  sole  director.printed copies of the documents if you wish,
but for most people this is not considered
The company secretary has certain legalnecessary.
responsibilities such as ensuring that the
company submits annual returns to CompaniesAn alternative to forming the company from
House and that the company and its directorsscratch yourself is to buy what is known as
operate  within  the  law.an  "off  the  shelf  company".
Many people going into business on their ownOff the shelf companies are companies which
choose their spouse or another family memberhave been formed already by a company
to fulfil the role of company secretary.formation agent, but which have not yet
Where two or more people are forming atraded. You pay a fee to the formation agent
limited company, one of them will often takeand they then transfer ownership of the
on the job of company secretary in additionready-formed  company  to  you.
to being one of the directors of the company.
Obviously, with an off the shelf company you
An alternative is to use the services of aare restricted on your choice of name for
third party firm who provide companyyour company, as you can only pick from the
secretary services to your business in returnlist of pre-formed off the shelf companies
for  an  annual  fee.that the formation agent has available at
that time. However, once you have bought your
The next thing to decide is how you willcompany you can apply via Companies House to
allocate shares in your new company. You willchange its name, but there is a fee for this.
need to specify how many shares your company
has and the value of them. Typically,As off the shelf companies tend to work out
companies are formed with 100 or 1000 sharesmore expensive and less flexible than forming
with  a  value  of  Â£1  per  share.the company yourself, it makes sense in the
majority of cases to form the company
Some or all of these shares are then issuedyourself using one of the online formation
to the shareholders in return for theservices.
appropriate sum of money. Ownership of shares



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