| When starting a business, a large number of | | | | gives the shareholders the right to vote at |
| people go down the route of forming a limited | | | | company meetings and entitles them to be paid |
| company or, to give it its full title, a | | | | dividends on their shares based on the |
| limited liability company. | | | | profits of the company. |
| | | | |
| The alternative for someone starting up in | | | | Any shares which remain unsold are known as |
| business on their own is to trade as a | | | | unallocated shares. |
| sole-trader. There is less formal paperwork | | | | |
| involved in going into business as a | | | | It is a good idea to seek advice from an |
| sole-trader, but a limited company can offer | | | | accountant at this point, in order to make |
| a number of advantages. These include greater | | | | sure that the allocation of shares is done in |
| opportunities to reduce the amount of tax | | | | the most tax efficient way for your own |
| your business pays, and increased protection | | | | particular 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 company | | | | registered office. Under Company Law, all |
| is structured, and details the steps you need | | | | companies are required to have a registered |
| to take to form your own limited company. | | | | office. |
| | | | |
| The first thing you will need to do is to | | | | The registered office of a company is the |
| decide on a name for your new limited | | | | address where official documents can be |
| company. Companies House maintains a list of | | | | served and where certain statutory documents |
| all companies registered in the UK, and you | | | | relating to the company are kept and can be |
| can use their website to check if the name | | | | made 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 have | | | | the 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 Ultimate | | | | Having made all these decisions, you now have |
| Widget Company" then the full name of your | | | | all the information you need to form your |
| limited company would be The Ultimate Widget | | | | limited 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 two | | | | company formation services. For a fee of |
| people to act as officers of the company. One | | | | around £30 to £50 they will process |
| of these people will be the company | | | | your application with Companies House and |
| secretary. The other person will be a | | | | send you all the required company documents |
| director of the company. If you wish, the | | | | by 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 legal | | | | necessary. |
| responsibilities such as ensuring that the | | | | |
| company submits annual returns to Companies | | | | An alternative to forming the company from |
| House and that the company and its directors | | | | scratch yourself is to buy what is known as |
| operate within the law. | | | | an "off the shelf company". |
| | | | |
| Many people going into business on their own | | | | Off the shelf companies are companies which |
| choose their spouse or another family member | | | | have 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 a | | | | traded. You pay a fee to the formation agent |
| limited company, one of them will often take | | | | and they then transfer ownership of the |
| on the job of company secretary in addition | | | | ready-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 a | | | | are restricted on your choice of name for |
| third party firm who provide company | | | | your company, as you can only pick from the |
| secretary services to your business in return | | | | list 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 will | | | | company you can apply via Companies House to |
| allocate shares in your new company. You will | | | | change 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 shares | | | | more expensive and less flexible than forming |
| with a value of £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 issued | | | | yourself using one of the online formation |
| to the shareholders in return for the | | | | services. |
| appropriate sum of money. Ownership of shares | | | | |