Set up and register a limited company

The directors of a limited company are responsible for the proper running of the business. You must meet all relevant legal requirements - in your business operations, admin, insurance, and in hiring, paying and managing staff.

Director's responsibilities include:

• Register your company with Companies House and register with HMRC for corporation tax (this is often done during company registration, but can also be done separately through HMRC)

• During registration you must upload a ‘memorandum of association’.

• You must also upload ‘articles of association’ during registration.

• Determine your shares, including the type and number of shares to issue.

• Provide a 'statement of capital’ to Companies House

• Provide details of the ‘prescribed particulars’ in your statement of capital.

• Identify your company's people with significant control (PSCs) and give their details to Companies House.

• Keep accurate records for your business, including records about the company, financial and accounting records, records of key decisions and meeting minutes.

• File your annual accounts and corporate tax return on time at the end of each financial year

• Pay corporation tax for all of the company's profits.

• Pay your own tax on earnings and dividends through PAYE and self assessment if necessary.

• File a confirmation statement each year with Companies House

• Report changes of your company details to HMRC and Companies House if necessary, e.g. a change in director contact details, etc.

• Register for VAT if applicable for your business or the Construction Industry Scheme

• Register as an employer with HMRC and operate a 'Pay as you earn' (PAYE) payroll scheme (even if you are only employing yourself as a 'director').

• Use a business bank account and keep accurate financial records.

Company directors

You must appoint at least one company director who is legally responsible for ensuring that company accounts and reports are prepared properly and for the legal running of the company. You don’t need a company secretary but some people appoint one to take on some of the directors’ responsibilities.

Remember that directors’ personal information - including names - are publicly available on Companies House.

If you are planning to run your business from home, you can keep your address private by setting up your official business address elsewhere. You can do this by using a third-party agency, such as a virtual office or company formation and registration service, or your accountant or solicitor (but not a PO box). Read our guide to starting a business from home to find out more.

Shareholders

You also need at least one shareholder, who can be a director. You’ll own 100% of the company if you're the only shareholder. There is no limit to the number of shareholders a company can have.

Shareholders can control the company, vote on key decisions, and receive dividends from its profits. You must provide details of your shares and shareholders when registering your company.

Shares can be set at any value, however, if the company closes, shareholders have to pay the full amount. To limit liability, many companies set a low value, such as £1. You can issue different share classes which have varying rights, but most people set up with ‘ordinary’ shares. ‘Ordinary’ shares usually allow one vote per share, and holders can be paid dividends.

Anyone who owes over 25% of company shares or voting rights is classed as a person with significant control (PSC).

You must choose a name for your business and it has to comply with the rules for naming a limited company.

This means that your name cannot:

• be the same as another registered company’s name or trademark imply a link with government or local authorities without permission

• be anything offensive

• contain a ‘sensitive’ word

You must display your official registered name on a sign on any physical premises and on all company documents, publicity and letters. Find out more.

You can also trade under a different name from the one you register, this is known as a “trading name” or “business name”. Your trading/business name cannot contain sensitive words or refer to a business structure (such as ‘limited’ or ‘plc’).

For more information on naming your business, see our guide or visit the Gov.uk site.

When you register your company with Companies House, you will have to prepare and upload documents in which you agree how to run your company.

These are your:

• Memorandum of association - a legal statement signed by all initial shareholders agreeing to form the company. If you are registering with Companies House online it will be created automatically.

• Articles of association - written rules which must be agreed by all shareholders, directors and the company secretary (if you have one) about the running of your company.

• Statement of capital - giving information about the company's shares, including the number and type of shares, the total value, and details of all of the shareholders.

• Prescribed particulars - as part of your statement of capital, laying out the rights of each share type and includes details on the share of dividends, whether shares can be redeemed for money, and voting rights.

Accurate record-keeping is essential to comply with the law and successfully run your business. Limited companies must maintain various records about the company itself and financial and accounting records, which must comply with strict requirements. Records must be kept for the set period of time depending on your business structure, for example limited companies must keep records for at least six years.

Records about the company

You must keep details of:

• your company directors, shareholders and any company secretaries

• the results of any shareholder votes and resolutions

• loans or mortgages secured against the company’s assets

• company ‘debentures’ - liabilities to repay loans at a set time in the future - and who they must be paid back to

• indemnities - agreements for the company to pay if it is at fault and if something goes wrong

• details of transactions when shares in the company are bought and sold

• register of ‘people with significant control’.

Accounting records

The accounting records you need to maintain include:

• all income and expenditure of the company

• all goods bought and sold

• who the goods were bought from and sold to

• stock held at the end of the financial year

• stocktaking records used to calculate the stock figure

• details of the company’s owned assets

• amounts the company owes or is owed.

For your taxes you will need details of

• all expenditure, including receipts, delivery notes, and orders

• all income e.g. invoices, till rolls, contracts, etc

• all other relevant documents like bank statements and correspondence.

You must use a business bank account for your Limited Company and it is a good idea to use accounting software such as FreeAgent or Xero to help keep accurate records of your finances.

For more information see Gov.uk and if you need help or advice speak to a qualified accountant.

The main step in setting up your limited company is to register it with Companies House and incorporate your company. You can incorporate your company yourself, or there are numerous businesses that can help you incorporate a limited company. You can also speak to an accountant or legal professional for help.

When you register your company online, you will be set up for Corporation Tax at the same time.

Alongside all of the documents you have prepared, when registering you’ll need to:

• register an official address

• choose a SIC code to identify what your company does

• provide at least 3 pieces of personal information about yourself and your shareholders or guarantors, for example

There is a small fee to register your company and you will receive your ‘certificate of incorporation’ which confirms that your company legally exists, and provides your company number and date of formation.

You can register online with Companies House.

Once you have registered your company with Companies House you should add Corporation Tax services to your business tax account when you start to do business. ‘Doing business’ includes selling your goods and services, buying stock, advertising, renting premises, and hiring staff.

As a director, you are responsible for ensuring your records are accurate and that your corporation tax and all applicable taxes are submitted and paid. If you need assistance or support, seek expert advice from a qualified accountant or tax adviser.

There may also be specific rules your business needs to follow, applications and registrations you need to make or funding or grants available to you. You may also need to apply for VAT.

You can use this Gov.uk tool to check your next steps.

You can also use Business Gateway’s online resources to find more help and advice on running your business.