The Essential Checklist for Setting Up a Limited Company
If you are a freelancer or contractor who has decided to begin trading as a limited company in the UK, there a number of things you have to do in order to properly set up your company. It might seem daunting but setting up a limited company is a relatively straightforward process as long as you tick off the following essentials from your checklist. Although this is not an exhaustive list, it will give you a good starting point of the basic areas you need to cover before you can start trading as a limited company.
1. Choose a Company Name
The first step in setting up any limited company is choosing a name. Sounds relatively straightforward, right? However, you will have to carefully consider the name you choose for your business as it can’t already be in use by another company or trademarked. Before you settle on a name for your limited company, it’s worth doing some research to find a company name that will pass the restrictions placed on company names.
2. Register Your Company and Company Address
Once you have settled on an appropriate name for your limited company, you’ll have to register your company along with your official company address. You can do this by registering with Companies House, or if you already have a limited company accountant, they will often take care of this for you as part of their service.
3. Hire an Accountant
If you haven’t already, you should look into hiring an accountant for your limited company, especially if you work in a sector that requires industry-specific accounting knowledge. By using an accountant, you will also save yourself time and money as they can look after your account while you get on with the running of your business.
4. Company Directors and Shareholders
Any limited company must declare who the company directors are, along with any shareholders. If you are setting up a limited company but will be trading on your own, you will be both the director and the shareholder of the company. Otherwise, shareholders are the people who own the company, while directors are the ones responsible for running it.
5. Declare Your PSCs (People with Significant Control)
Since 2016, all private limited companies in the UK have been required to maintain a PSC register – a register of people with significant control over company matters. Even if you are the company’s only director and shareholder, you will have to create a PSC register and submit it to Companies House yearly. If your limited company has more than one director and shareholder, your PSC register will need to include any individual that holds 25% or more of the shares in the company or holds 25% or more of the voting rights.
6. Set Up a Business Bank Account
Setting up a business bank account for your limited company is essential in order to keep your personal and professional finances separate. Limited companies are classed as separate entities from any directors or shareholders, and so are legally required to have a separate bank account.
7. Identify The Company’s SIC Code
All limited companies are required to have a SIC (Standard Industrial Classification) Code. This is used to inform the government of the industry the company operates in – for statistical purposes – and will have no effect on how your limited company operates. This must be included in your application to Companies House to incorporate your company. If you are finding it difficult to choose the correct SIC code for your limited company, keep in mind that you are allowed to choose up to 4 different codes, and can change any of these at a later date.
