Opening (or starting, or forming, or registering, or incorporating) a company limited by shares is now extremely simple thanks to formation agents (such as us!) and the registrar of companies, Companies House, simplifying the process. A company can now be formed online in just a matter of hours.
In the UK there are a number of legal structures associated with starting a business. The two most popular of these structures are sole traders and companies limited by shares. As you can see, the word ‘company’ relates to a specific legal structure. In this post we’re going to look at how you can open your own limited company.
Before we get started, seeing as we brought it up – it’s only fair that we look at the primary difference between a sole trader and a company limited by shares…
With a sole trader, there’s no distinction between the individual and their business – which means if it all goes wrong, the individual is liable – they pay out their own pocket. With a company limited by shares, the owners (also know as shareholders or members) are only liable for shares they’ve not paid for. For example:
If a company had two shareholders who each owned two shares worth £1 (so there are four shares in the company), and they’d only paid for one share each – if the company went bust, the maximum they’d have to pay out would be £1 each – the value of their unpaid shares.
The Limited Company Formation Process
Here’s a list of the information that’s required to open a company:
- The name can not be the same as any other registered company name in the UK
- There are some words and expressions that can’t be used without permission, Queen for example
- The name must end with Limited or Ltd
Registered Office – The Company’s Official Address
- This can be any UK address that you have permission to use
- The company does not need to trade from the address but government mail that’s sent to the address must be forwarded on to the necessary people (so it’s okay to use an accountant’s address for example)
- The address is on the public register so publically viewable to anyone, it’s because of this that some people choose not to use a residential address as the registered office
- See here for information on our registered office service
Director/s – The People Who Run the Company
- A company can be formed with just one director
- Whilst corporate appointments are allowed (another company acting as director) at least one person must be appointed as the director
- To appoint a director you need the following information: Full name, occupation, date of birth, nationality, service address (the director’s official address that is on the public register – similar to the registered office), residential address (this is not on the public register)
Shareholder/s – The People Who Own the Company
- A company can be formed with just one shareholder (and this person can also be a director – so a company can be formed with one person)
- Corporate appointments are allowed
- To appoint a shareholder you need the following information: Full name, service address, town of birth, eye colour, phone number, number of shares to be held, currency of shares, value of shares
The Memorandum and Articles of Association
- These are the documents that outline how the company will be run
- You can draw up your own or use a pre-prepared version (often supplied for free by formation agents)
So who do you give this information to? All companies are formed at Companies House – the UK’s registrar of companies. You can form online directly through them for £15, alternatively you can use a online company formation agent – such as us – from as little as £13.99 with the £15 Companies House fee included (yes, included).
For more information about how we can help #ChangeYourLife by opening a limited company for you, see here: Simple UK company formation