If you’re thinking of starting your own business you may be asking “What is a Limited Company” and “Why should I set up a limited company, as opposed to a sole trader?”
The quick answer is as a sole trader you will be liable for all your debts if your business fails. This could lead to bankruptcy and personal financial loss. Setting up a limited company offers some protection or ‘limitation’ to your financial liability. Although it does incur more administration and setup, it is safer and more financially secure in the long run.
The key to this lies in the fact that a limited company is a separate legal entity to you, the owner. The risk of loss is limited only to the money, value or worth of the company and providing you trade responsibly, you are protected from personal liabilities. It also creates a better credibility with your traders and clients than acting as a sole trade.
How do I proceed?
Your first step should be the official government website. This page will guide you through a number of requirements and things you should be aware of. Before you begin, familiarise yourself with the process so that you know what to expect and how to proceed. If you need straight forward no obligation advice, please do contact us and we’ll be glad to guide you through the process. Remember… you can make your application online, so prepare all the information you need before hand. The overview section on that page will lead you through the essential steps.
The name of your Limited Company
Your company name must be unique. Search the Companies House Register to see if your chosen name is already listed. Also beware that ‘like sounding names’ or tiny variations may not be acceptable and lead you into difficulties later.
Your Limited Company official address
- It must be a real physical place and in the same country as your business is registered in.
- You can use your home address if the above applies,
- You can use a PO box, providing it is followed by a postcode and real address.
- Your company address will appear on the Public Business Register.
Appoint at least one director
- A limited company must have at least one director, who is a person over 16
- A director will in normal circumstances have their name and address publicly available at Companies House.
At some point you will need to organise and submit accounts. Accounts must be filed each year before the required date, or a fine may be imposed. The company, or its accountants must inform HM Revenue and Customs through an annual return of any taxable income and profits and corporation tax is payable on your income and profits.
Those are the basic steps to setting up a Limited Liability Company. Other details are included in the Government website Most business owners employ an accountant to deal with these matters as this leaves the business owner free to devote their time and efforts to running the business and achieving profitability and sales.
At Safehands we’re very happy to be involved with your business decision making and handling your financial requirements, from book keeping to annual returns and future investments.