Setting up a Limited Company? The A to Z Guide (All you need to know)

Ryan Patrick

Mar 29, 2024 • 13 min read

In this guide, you will see all that is needed to set up a limited company.

What is a Limited Company

A limited company, also referred to as a private limited company, is a company made up of directors, shareholders and other members of the company. This company is governed by Companies House and regulated by the Companies Act 2006 which serves as a legal constitution for all Limited companies.

Everything You Need to Set up a Limited Company

Before deciding to set up a Limited Company, you have to get all you need in order and ready. Although creating the company itself doesn't take much time, the processes involved with setting up a company are the main thing.

It is very important to have the correct documents and information ready before proceeding to start up your company. The following are what you need to set up a company.

1. Company Structure

Limited companies are divided basically into two; limited by guarantee and limited by shares.

In limited by guarantee, no shares are issued in the company and this structure is mostly used for companies that are created to help or benefit a community of a particular set of people. They are also called non-profit companies.

Note; limited by-guarantee companies are different from charities.

In limited by shares, shares are issued to shareholders and the company is a profit company.

Knowing the kind of company you want to create will help you determine the structure of the company to choose. If you intend to create a company that will be for aiding people or serve the community, then you should go for a limited-by-guarantee company

2. Directors

The directors are the representatives of the company to the government, Companies House and investors or the public. Without the directors of a company, Companies House will not approve the incorporation of the company.

The directors are responsible for performing all the duties of the company and ensuring the company is in order and abides by the laws of the Companies House. A company can have one or more directors depending on the size of the company and the availability of the director.

Some people who want to own a company can register their company with them as the only director and this is acceptable by Companies House. Information you need about directors when setting up a company include

Name of the director
Date of birth
Residential address
Service address
Occupation

The service address of a director can be the residential address or the registered office address of the company. The service address is the address where the director receives all mail regarding their director's holiday at the company.

Although it is not advisable to use the residential address of directors as their service address due to insecurity issues, a director can also choose to use it. The company's registered address is the best to use when the director does not have a separate office address of their own.

Anyone can be a director as long as they are 16 years and above and ready to take on the responsibilities of the company.

3. Registered Office Address

As a company, you must provide your registered office address to be able to set up your company. The company's registered address can be the residential address of the director or a professional service address.

The essence of providing the office address is to give clients or investors a location to meet the company. The registered office address of a company is always made available to use public at all times.

If the company does not have an address, it can use any professional service address which is available for use by companies at a token. If the company then gets their office, they can change the previous registered address to their own.

4. Secretary(optional)

The secretary of the company takes care of some of the duties of the directors. In the absence of a secretary, the director(s) can perform the duties of the secretary. The secretary keeps in place all the information and documents of the company either digitally or physically.

These documents should be kept in place in the case of supervision by Companies House or other authorities. The details of the secretary needed for the incorporation of a company include

Full name of the person
Date of birth
Nationality
Occupation
Residential address
Service address

The residential address is not available in public registers but the service address is available on all public registers of the company and Companies House. The service address can also be the residential address of the secretary, a registered office address or a professional service address but this is by preference.

A person must be 16 years and above to qualify for a secretary of a company.

5. Shareholder(s)

A shareholder of a company is someone who buys a part of the company as shares. A shareholder is only present if the company is limited by shares. To incorporate a company, there must be shareholders present before Companies House will accept the application.

One can be the sole shareholder of a company if there is only one person present at the time of incorporation. The accepted number of shareholders ranges from 1 to a non-limited amount of people.

A shareholder can also be the director, secretary or persons with significant control (PSC) of the company at the same time. It does not limit the person from having other occupations in the company or outside the company.

The details of a shareholder required for incorporation of a company vary depending on whether the shareholder is a person with significant control of the company or not.

Below are the details required from a shareholder of the company during incorporation.

Full name
The date of birth
Residential address
Service address
Nationality
Nature of control(this only applies if the shareholder is also a person with significant control of the company and means the percentage of shares the person owns in the company).
Three security details (the security details act as an online signature for the shareholders which can only be known by them alone).
The first three letters of the maiden name of the shareholder's mother
The first three letters of the forename of the shareholder's father
The first three letters of the town of birth of the shareholder.

6. Persons with Significant Control (PSC)

PSCs are people who have a high value of control and influence in the company. They can influence the decision-making of the company and can implement certain rules and regulations in the company.

The PSCs are mostly shareholders who have a high percentage of company shares and thereby have a high worth in the company. The PSCs are mostly the first when it comes to active decision-making in the company and they can implement certain things in the company by going through the directors of the company.

The person with significant control can also be a director or secretary of the company and can hold any position in the company as this does not affect their position as the person with significant control of the company. They can also be members of other companies.

The details needed from a person with significant control of a company if they are not a secretary, director or shareholder of the company include

Full name
Date of birth
Residential address
Service address
Nationality
Nature of control

If the person is a shareholder, then their information will be recorded as a shareholder with significant control over the company and not understand the persons with significant control. This does not mean they are not PSCs of the company.

7. Business Activities

Before you create a company, you have to decide the business activities of the company. If your company will have a diverse business activity or will venture into more than one industry, it is important to keep that into consideration as it will be needed when applying for company registration.

All business activities should be outlined in the business plan if there are any. Making a business plan is important as it outlines everything you need to start up a company and everything needed to keep the company moving.

The industry of the company to be incorporated should be known.

8. Market Analysis

A critical market analysis should be made before going ahead to create or register a company at Companies House.

As a person who wants to create a company, you should do industry research about the industry your company will want to venture into and know all the dos and don'ts of the company to be able to navigate the market after incorporation.

A market analysis will also help the company strategise and make a business plan according to the strategies of other companies in the industry as well as companies in similar industries.

It is important to know the sales strategies of other companies, and the structure of the company to get a hint on how to incorporate or structure your own company.

9. Insurance

Insurance is optional as a company but you can choose to get insurance. Insurance helps to cover the company in the case of an emergency or a sudden happening. Insurance can also be gotten for a company even after incorporation or years after trading.

It is important but can be kept aside by the company owners if they see no reason to get insurance for the company.

How to Setup a Limited Company

Setting up a company is very easy and not stress-free compared to when everything was done on paper and the submission process was hectic. Recently, company registration can be done online or offline depending on the preference of the forming committee of the company.

It is important to have the above information in the correct order to avoid errors or delays during company formation. If any error or mistake is detected in the application, it might be delayed or even rejected by Companies House and the company will have to fill out another company registration form.

No false information should be given with the intent of misleading the public or the authorities, all ages on the application must be correct and apply to the right person. Information of two people should not be mixed and very filled accordingly and carefully.

According to the Companies Act 2006, company formation will be done by filling the Form IN01 at Companies House or any other body depending on the country.

Companies House is the governing body of all companies in the UK and they monitor and regulate the activities of the companies. All companies must obey all rules and regulations of the Companies House or they will face punishment(s).

The detailed process of setting up a company in the UK under Companies House is outlined below

1. Company Name

Selecting a company name is one of the most important stages of company formation. Without a suitable company name, you cannot even start the company formation process.

The company name must be unique and in some way, it should give a clue about the industry and activities of the company. The name must be unique to your company alone.

You cannot form a company with the exact name of a previous company. Your company name must be new in the system and has never been used by any registered company in the UK.

To check the availability of your company name and whether it has been used or not, you can go to the Companies House website navigate to the search name option and input the name you intend to use. If the name has been used, it will not be available for use.

You can also search the company name on the internet and see if any company pops up with the same name.

Once the name is picked or used by another company, as long as the company is still functioning, your company cannot make use of the same name during incorporation and after incorporation.

2. Company Structure

The company will have to decide the structure of the company. The company structure can be a company

Limited by shares or
Limited by guarantee

If the company is limited by shares, then guarantors will be issued guarantees but if the company is limited by shares, then the shareholders will be issued shares.

3. Choose a Registered Office Address

As explained earlier, a registered office address is the location of the company where authorities like HMRC and Companies House send important letters and notifications regarding the company. These notifications or letters include

Relevant feedback or information regarding Corporation Tax registration and VAT
Notifications of penalties due to late filing
Reminders to file annual accounts, confirmation statements and tax returns
Legal notices
Relevant statutory updates

The registered office of your address must be located in the country or jurisdiction where your company is formed. This means that

If your company was formed in the jurisdictions of England and Wales, the registered office address of your company must be located in England or Wales.
If your company was formed in the jurisdictions of Scotland, the registered office address of your company must be in Scotland.
If your company was formed in the jurisdictions of Northern Ireland, the registered office address of the company must be in Northern Ireland.

The address must relate to the location of incorporation and the address must be correct. If the company does not have an office address, it can make use of a professional service address.

Professional service addresses are made available by agents for use by companies and directors. All letters and notifications are received by this agent and then sent to the company or director. It is not advisable to use a professional service address for a company's registered office address because of inspection by authorities.

4. Appoint Officers of The Company

Officers of a limited by-shares company include the directors, secretaries, shareholders and persons with significant control.

Officers of a limited-by-guarantee company include directors, secretaries, and guarantors.

Depending on the structure of the company, the officers of the company should be appointed and all necessary information should be obtained.

The directors can be appointed by the owner of the company, other directors in the company or the persons with significant control of the company.

As the owner of the company, you can also be the only director and shareholder of your company since there is no legal amount of directors and shareholders needed for the incorporation of a company.

Also, as the owner of the company, you are the sole shareholder of your company and must own shares before you can issue your shares to other shareholders of the company or the persons with significant control of the company. The persons with significant control can be an individual, a group, a firm or even an entirely different company.

Typically, at incorporation of the company, the persons with significant control are the shareholders or guarantors depending on the structure of the company.

All the appointed officers of the company will have their information incorporated into the public register of the company.

The shareholders at incorporation are also regarded as subscribers of the company and in later years of the company, the subscribers hold a high decision-making power in the company.

5. Article of Association

The article of association is also known as a company's constitution. It is the compilation of all rules, regulations and obligations of members of a limited company that the company and its members must adopt and follow.

It is more of a book that regulates the overall activities of the company. The article of association contains information such as

The duties of the directors of a company
The duties of the secretary and shareholders of a company
The steps and procedures for holding a meeting among company members
Rules and regulations of the company
Obligations of members of the company
Process for appointment and removal of a director
Dividends payment
The process of company decision-making
And some other necessary information the company would want to include in the article of association.

The article of association regulates all the activities of the company including the day-to-day activities, decision-making, payment of dividends and salaries for workers, necessary information regarding the directorship of the company and other information regarding the membership of the company.

6. Structure the Shares

If the company is limited by shares, then you must decide how many shares you're issuing at incorporation. The least number of shares that can be issued is one and there is no upper limit of shares that can be issued by the company.

The shares issued will determine how much an individual owns and their power in the company's decision-making processes.

You can be the sole shareholder of your company, which means that you own 100% of the shares of the company. You can also have 2 shareholders in a company and the percentage of ownership depends on agreement between the two shareholders.

The nominal value of shares is £1 but you can sell your company's shares for any amount you choose to. You can also have as many shareholders as you want in your company.

7. Fill the Company Registration Form

The form for company formation is Form IN01, in this form, you'll fill in the information listed above in the correct order and manner.

You can contact a company formation agent for your company formation if you don't want to go through the hassle of application and other activities connected to registration.

Make sure to put in authentic and correct information about members of the company and also the company itself.

You can fill out the company registration form online on the Companies House official website or you can fill out the paper form and submit it by post. Either way, once there are no errors in your submitted information and everything meets the standard of Companies House, your application will be accepted.

8. Submit Your Application

Once you've successfully filled out your application, it is important to go through it two more times to check for any errors in the information filled. After you've confirmed all the information, then you can now submit it.

If you're registering online you just have to tap on the submit option and your registration will be successfully sent to Companies House. If you're applying manually, then you have to send your form through post to Companies House.

However, in recent times, people rarely apply for company registration through the post but register electronically.

After submission, you're expected to get a reply within the next 6 hours as long as all your information meets the standard. Companies House will send the company's incorporation certificate, memorandum of articles of association and share certificate for all shareholders.

After you've received your certificate of incorporation, you can then start trading and all company activities.

After Successful Registration

After successfully registering your company and your application is approved by Companies House, you have to do other necessary activities. Some of the activities carried out by the directors of the company include maintaining statutory company registers like

All these registers should be kept at the registered address of the company.

The company is also mandated to register for tax with HMRC. Taxes like VAT, PAYE and Corporation Tax. The directors and shareholders are also expected to register for self-assessment and pay tax on their untaxed income.

The company is also expected to report and file obligations. These obligations include

Annual confirmation statement
Tax returns and account for HMRC
Annual accounts for Companies House
Corporation Tax
Filing to notify Companies House and HMRC about certain changes in the company's details.

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Conclusion

Registration for company incorporation is an easy process when you do the right thing. You just have to get your information ready. Information like the director's details, shareholder's details, company name, company address, business activities and other necessary information needed during company incorporation. Once the application is accepted by Companies House, the company can now start trading and register for tax with HMRC. If you need any assistance achieving this, kindly contact Incorpuk for help today.