Limited Company Basics: A Quick Start Guide

Starting a Limited Company

To start a limited company, you need a unique name and, at the very least, one person to be both the director and shareholder. For small businesses, it's often the same person who takes on both roles. Before you make it official, it's a good idea to do these basic checks:

• Google Search: Look up the name online to see if other businesses are using it.

• Companies House: Make sure the name is available and not already taken.

• Trademark Register: Check if the name is protected.

Remember, these steps won't guarantee you won't run into issues later, but they're a good start. Once you're satisfied with your name and everything checks out, you can set up your limited company yourself on the government website, or you can get help from a formation company.

HMRC

When you register your company, you can also tell HMRC that you're ready to start trading and register for Corporation Tax at the same time. But if you're not going to start trading right away, you can tell HMRC later when you need a Corporation Tax Reference number for your tax returns and payments.

If you plan to pay yourself a salary or wages through payroll or think you might exceed the VAT threshold, there are more things to consider, and it's a good idea to get professional advice.

What You Need to Do as a Director

As a director, you need to make sure your company doesn't keep trading if it can't pay its bills. You're also responsible for keeping your financial records in order and paying your taxes on time. If you hire employees, there are other responsibilities you'll need to handle too.

Understanding Legal Aspects

A limited company is legally separate from you. That means it needs its own bank account with its own name. This separation usually means your personal liability is limited, but if you do something illegal, that protection can be taken away, and you could be held personally responsible.

Tax Stuff

The company pays Corporation Tax on its profits. Any money you pay yourself through payroll affects the profit calculation, but dividends you take out of the business come from after-tax profits, so they don't count in the same way.