How To Start a CompanyPosted 04 Dec 2014 You want to form a limited company to join the three million already operating in the UK but can you do it yourself? The answer to that is that you can – but most companies prefer to take the hassle out of the job by letting a professional formation agent do the job for them.
At least 400,000 new companies are expected to be registered this year. Agents can register companies on line, and a new web incorporation service will be online soon. But at the moment if you do it yourself you will probably need a paper application form INo1 which should give details of the company’s name,, registered office, secretary and directors, and share and subscriber details.
You will also need a Memorandum of Association giving the name of each subscriber forming the company and a commitment that they have at least one share. Once the company has been incorporated the memorandum no longer affects the operation of the company.
Next job is to supply Articles of Association which describes how the company will be run. If you choose to use the standard Model Articles these do not need to be filed at Companies House. The articles are in effect a company rulebook. You can find model articles of association on the Companies House website (http://www.companieshouse.gov.uk) and form INo1 can be downloaded from there too.
What does it cost? The standard fee for registering a limited company is £20 for documents processed in eight days and £30 for same day registration. To file online you will need specific software or go through a formation agent.
Is it worth doing? City tax lawyer Max Charlton says that it is - the tax advantages of being a limited company can be quite spectacular. He says that owners of small businesses making a profit of less than £300,000 can benefit both from lower corporation tax rates and lower national insurance.
Max Charlton points out that owners of limited companies can take money in the form of dividends instead of salary - which not only carry a lower tax rate but don’t require payment of national insurance. On the other hand you can’t take money from the business without formally recording it as salary, dividend or loan.
He says: “Being a limited company also means that you have no personal liability for company debt if something goes horribly wrong. Instead, your liability is theoretically limited to the value of the shares you own in the company.”
The advantages of limited companies mean they are on the increase and should you not want the bother of registering a new company there’s a growing trade in off-the-shelf shell companies to which existing business can be transferred.
The downsides to a limited company are more rules and regulations, accountancy fees tend to be higher and penalties for getting your paperwork wrong can be greater. On the other hand, many sole traders have found that an increasing number of clients will nowadays only deal with limited companies. But which ever path you choose, it’s important to realise that your decision isn’t final and it’s always possible to change at a later date. Read more like this< Back