A limited company is a company ‘limited by shares’ or ‘limited by guarantee’. Limited by shares Limited by shares companies are usually businesses that make a profit. This means the company: is legally separate from the people who run it has separate finances from your personal ones has shares and shareholders can keep any profits it makes after paying tax Limited by guarantee Limited by guarantee companies are usually ‘not for profit’. This means the company: is legally separate from the people who run it has separate finances from your personal ones has guarantors and a ‘guaranteed amount’ invests profits it makes back into the company

Choose a company name

You must choose a name for your business if you’re setting up a private limited company. There are different rules for sole traders and business partnerships . Your name cannot be the same as another registered company’s name. If your name is too similar to another company’s name or trade mark you may have to change it if someone makes a complaint. Your name must usually end in either ‘Limited’ or ‘Ltd’. You can include the Welsh equivalents ‘Cyfyngedig’ and ‘Cyf’ instead if you registered the company in Wales. Check the Companies House register . ‘Same as’ names ‘Same as’ names includes those where the only difference to an existing name is: certain punctuation certain special characters, for example the ‘plus’ sign a word or character that’s similar in appearance or meaning to another from the existing name a word or character used commonly in UK company names Example ‘Hands UK Ltd’ and ‘Hand’s Ltd’ are the same as ‘Hands Ltd’. You can only register a ‘same as’ name if: your company is part of the same group as the company or Limited Liability Partnership ( LLP ) with the existing name you have written confirmation that the company or LLP has no objection to your new name ‘Too like’ names You may have to change your name if someone complains and Companies House agrees it’s ‘too like’ a name registered before yours. Example ‘Easy Electrics For You Ltd’ is the same as ‘EZ Electrix 4U Ltd’ Companies House will contact you if they think your name is too like another - and tell you what to do. Other rules Your company name cannot be offensive. Your name also cannot contain a ‘sensitive’ word or expression, or suggest a connection with government or local authorities, unless you get permission. Example To use ‘Accredited’ in your company’s name, you need permission from the Department for Business and Trade (DBT). You can read more guidance on naming your company and which words you need permission to use if you’re not sure. Trading names You can trade using a different name to your registered name. This is known as a ‘business name’. Business names must not: include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘ LLP ’, ‘public limited company’ or ‘plc’ contain a ‘sensitive’ word or expression unless you get permission If your business name is too similar to another company’s trade mark you may have to change it if someone makes a complaint. Displaying your name There are rules you must follow about displaying your company name . When you do not have to use ‘limited’ in your company name You do not have to use ‘limited’ in your name if your company is a registered charity or limited by guarantee and your articles of association say your company: promotes or regulates commerce, art, science, education, religion, charity or any profession cannot pay its shareholders, for example through dividends requires each shareholder to contribute to company assets if it’s wound up during their membership, or within a year of them stopping being a shareholder

Check the rules for company addresses

You must provide a registered office address when you set up a limited company. This is where all written communication must be sent. If you choose to use a third party agent to handle your mail, they must send you all your company’s mail. You may be breaking the law if you choose to receive only some of the mail sent to your company (for example, by using a service which stops junk mail). The address must be: a physical address in the UK in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland You can no longer use a PO Box as your registered office address. Your company address will be publicly available on the online register . You cannot remove the address from the register. Keeping your address private If you do not want your address to be publicly available (for example, if it’s your home or someone else lives there) you can either: use a different address, such as the address of the person who will manage your Corporation Tax - you must get their permission first appoint an agent who will give you an address to use You must have the address in place before you register your company.

Appoint directors and a company secretary

Your company must have at least one director. Directors are legally responsible for running the company and making sure company accounts and reports are properly prepared. A director must be 16 or over and not be disqualified from being a director. Directors do not have to live in the UK but companies must have a UK registered office address. Directors’ names and personal information are publicly available from Companies House . Directors must provide a service address (or ‘correspondence’ address), which will also be publicly available. If they use their home address, they can ask Companies House to remove it from the register . Company secretaries You do not need a company secretary for a private limited company. Some companies use them to take on some of the directors’ responsibilities. The company secretary can be a director but cannot be: the company’s auditor an ‘undischarged bankrupt’ - unless they have permission from the court The restrictions placed on a person when they’re made bankrupt usually end when they’re free from their debts (known as ‘discharged’). You can check if someone has been discharged using the Insolvency Register. Even if you have a company secretary, the directors are legally responsible for the company.

Shareholders and guarantors

Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights. For example, directors may need shareholders to vote and agree changes to the company . Companies limited by guarantee have guarantors and a ‘guaranteed amount’ instead of shareholders and shares. Most companies have ‘ordinary’ shares. This means directors get one vote on company decisions per share and receive dividend payments. Work out your shares A company limited by shares must have at least one shareholder, who can be a director. If you’re the only shareholder, you’ll own 100% of the company. There’s no maximum number of shareholders. The price of an individual share can be any value. Shareholders will need to pay for their shares in full if the company has to shut down. You can choose a low share value (for example, £1) to limit the shareholders’ liability to a reasonable amount. Issuing your initial shares When you register a company you need to provide information about the shares (known as a ‘statement of capital’). This includes: the number of shares of each type the company has and their total value - known as the company’s ‘share capital’ the names and addresses of all shareholders - known as ‘subscribers’ or ‘members’ Example A company that issues 500 shares at £1 each has a share capital of £500. Share capital is not linked to how much the company is worth. Prescribed particulars You also need to include information about what rights each type of share (known as ‘class’) gives the shareholder. This information is known as ‘prescribed particulars’ and must include: what share of dividends they get whether they can exchange (‘redeem’) their shares for money whether they can vote on certain company matters how many votes they get Companies limited by guarantee You must have at least one guarantor and a ‘guaranteed amount’. Guarantors: are company members control the company and make important decisions do not usually take profit from the company - instead the money is kept within the company or used for other purposes Guaranteed amount Guarantors promise an agreed amount of money to the company if it cannot pay its debts. This is the ‘guaranteed amount’. They must pay the company the full amount of their guarantee. This payment covers guarantors for situations such as the company being closed down. The guaranteed amount is not linked to how much the company is worth - you choose how much they pay.

Memorandum and articles of association

When you register your company you need: a ‘memorandum of association’ - a legal statement signed by all initial shareholders or guarantors agreeing to form the company ‘articles of association’ - written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary Memorandum of association If you register your company online, you don’t need to write your own memorandum of association. It will be created automatically as part of your registration. If you register by post, use the memorandum of association template . You cannot update the memorandum once the company has been registered. Articles of association You can either: use standard articles (known as ‘model articles’ ) write your own and upload or send them when you register your company Community interest companies You cannot use limited company model articles if you’re setting up a community interest company ( CIC ). Use the CIC regulator’s model constitutions instead.

Register your company

Use this service to register your company with Companies House. You will be registered for Corporation Tax at the same time. There’s a different way to register for Corporation Tax if you’ve already registered with Companies House. You’ll get a ‘certificate of incorporation’. This confirms the company legally exists and shows the company number and date of formation. You’ll need at least 3 pieces of personal information about yourself and your shareholders or guarantors, for example: town of birth mother’s maiden name father’s first name telephone number national insurance number passport number It costs £12 and can be paid by debit or credit card. Your company is usually registered within 24 hours. It’s currently taking longer than usual to register companies because of a high number of applications. You can also use this service to: register for PAYE to tell HMRC you’re employing staff (including yourself if you’re the only director) continue an application if you’ve already started registering If you do not want to use ‘limited’ in your company name you must register by post. Register now You’ll need to create a Government Gateway user ID and password for your company when you register it. You cannot use your personal Government Gateway ID. Other ways to register You can also register: by post using an agent using third-party software You’ll also need to register for Corporation Tax within 3 months of starting to do business. Register by post You can register by post using form IN01 . Postal applications take 8 to 10 days and cost £40 (paid by cheque made out to ‘Companies House’). Send your application to the address on the form.

Register for Corporation Tax

Most companies register for Corporation Tax and PAYE as an employer at the same time as registering with Companies House. You’ll need to register for Corporation Tax using this service if you registered your company: with Companies House but you have not registered for Corporation Tax by post using an agent using third-party software If you’ve already registered for Corporation Tax, sign in to HMRC online services to file your company tax return or make a payment. If you do not have an online services account, you can create one when you sign in. Register within 3 months of starting to do business. This includes buying, selling, advertising, renting a property and employing someone. You can check if you’re unsure what counts as starting to do business . You may get a penalty if you register late. How to register Sign in to your business tax account to register for Corporation Tax. Follow the guidance in your account to register. You’ll need your company’s Government Gateway user ID and password to sign in. If you do not have a user ID, you can create one when you sign in. You’ll also need your company’s 10-digit Unique Taxpayer Reference ( UTR ). This is posted to your company address by HM Revenue and Customs ( HMRC ) within 14 days of the company being registered with Companies House (incorporated). Request your company’s UTR online if you did not get one after registering your company. What you need to tell HMRC When registering, you’ll need to tell HMRC : your company’s registration number the date you started to do business (your company’s first accounting period will start from this date) the date your annual accounts are made up to Check your registered office address is correct before registering for Corporation Tax. This is where all letters are sent. If this address needs to be updated, you must tell Companies House . What happens next HMRC will send you: your Corporation Tax activation code instructions on how to set up on HMRC ’s online Corporation Tax services HMRC will also send you the deadline for paying Corporation Tax. These will be sent by post to your registered office address. You’ll need to file a Company Tax Return , even if you make a loss or have no Corporation Tax to pay. Finding your UTR after you’ve registered If you enrolled for the Corporation Tax online service you can find your 10-digit UTR in HMRC online services . You can also find it on all letters from HMRC . You need your UTR : if you contact HMRC about Corporation Tax to send your Company Tax Return using commercial software

Limited companies

A limited company is a company ‘limited by shares’ or ‘limited by guarantee’.

Limited by shares

Limited by shares companies are usually businesses that make a profit. This means the company:

is legally separate from the people who run it
has separate finances from your personal ones
has shares and shareholders
can keep any profits it makes after paying tax

Limited by guarantee

Limited by guarantee companies are usually ‘not for profit’. This means the company:

is legally separate from the people who run it
has separate finances from your personal ones
has guarantors and a ‘guaranteed amount’
invests profits it makes back into the company

Step 1 Check if being self-employed is right for you
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There are other ways to work for yourself. Check if you should set up as one of the following instead:
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