Over 90% of the Interim Managers we work engage with operate through their own Limited companies. Electronic company formation has made registering a Limited company extremely quick and straight forward. A new company submission to Companies House can be made online and a new company can be formed in a matter of hours for less than £50. The steps outlined below take you through the process of setting up a Limited company.
Once you have set up your Limited company open a business bank account, set up a spreadsheet to record your business income and expenditure, get some quotes for professional set up and appoint an accountant.
1.) Setting up
You can run your business as a private limited company. This means the company:
You’ll also need:
shareholders to agree to create the company and the written rules (known as ‘memorandum and articles of association’) details of people with significant control (PSC) over your company, for example anyone with more than 25% shares or voting rights
Once you have these details, you can register your company.
2.) Choose a 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 an existing trade mark 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’.
‘Same as’ names
‘Same as’ names includes those where the only difference to an existing name is:
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.
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, Energy and Industrial Strategy (BEIS).
Check which words you need permission to use, and who from.
You can trade using a different name to your registered name. This is known as a ‘business name’.
Business names must not:
You’ll need to register your name as a trade mark if you want to stop people from trading under your business name.
You cannot use another company’s trade mark as your business name.
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:
3.) Company address
Your registered office address is where official communications will be sent, for example letters from Companies House.
The address must be:
4.) 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 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.
You do not need a company secretary for a private limited company. Some companies use them to take on some of the director’s 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 choose to have a company secretary, the directors are legally responsible for the company.
5.) Shares and shareholders
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.
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:
A company that issues 500 shares at £1 each has a share capital of £500.
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:
6.) Memorandum and articles of association
When you register your company you need:
7.) Register your company
You can register your company if you have everything you need to set up.
You can only register online if all of the following apply to your company:
If you choose not to use ‘limited’ in your company name, you must register your company by post using form IN01.
You can also use this service to:
8.) Register for Corporation Tax, National Insurance and PAYE
After you’ve registered your company with Companies House, you’ll need to register it for Corporation Tax.
Most companies can register online 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 within 3 months of starting to do business. This includes buying, selling, advertising, renting a property and employing someone.
Once you have set up your Limited company, follow the next steps:
Open a business bank account. The following Banks provide free banking for Limited company business accounts: Barclays, Metro, Nat West, Co-operative.
Register for VAT. If you expect your annual turnover to reach £85,000 per annum or above, you are required by law to register for VAT. If you expect your annual turnover to be less than £150,000 per annum there may be tax advantages to be gained by registering for the Flat Rate Vat Scheme.
Set up a spreadsheet to record your business income and expenditure, or use a professional software package such as Sage Business Cloud Accounting (typical 2019 cost £100 - £120 per annum);
Get some quotes and/or recommendations and take out a Professional Indemnity Insurance policy. It may be prudent to wait until you have been offered and accepted your first interim assignment before taking out Professional Indemnity Insurance and the client may have a figure in mind for the minimum level of cover (typical 2019 cost £300 to £700 per annum);
Get some quotes and/or recommendations and appoint an Accountant. Have an initial meeting to find out exactly what records you should be keeping and exactly what information they need to produce your end-of-year accounts (typical 2019 cost £400 - £800 per annum).
Completing the steps above puts you in a position of compliance to work as an Interim Manager through your own Limited company.
Friday Dec 7, 2018