How to start setting up a limited company in the UK
You’ve taken advice from an accountant and it looks like setting up a limited company in UK is the best trading option for your contracting career. So, exactly how do you start setting up a contractor limited liability company in the UK?
First you need to decide some basic details about your company – its name, why you’re setting it up, how you plan to run it, who will own it, and who the company officers will be, eg the directors and company secretary, if you choose to have one.
Then you need to choose what route to use to register a limited company, appoint an accountant, open a bank account and possibly register for VAT. Once you’ve sorted out these details, your ltd business is ready to trade.
What you need to know for company formation
When first deciding on your company name, you can decide to either call your company a name of your choosing, if that name is available, or you can buy an ‘off-the-shelf’ company that has already been incorporated with a name.
UK companies require shareholders, at least one director and a set of rules, called the Memorandum and Articles of Association, in order for Companies House to set up a limited company. As a contractor, your shareholders will normally be you, and possibly your spouse. Most contractors choose to be a director of their contractor ltd company, and you can also include your spouse as a director and company secretary.
Your company will need a registered office to which all official notices and correspondence can be sent. That address is typically your accountant’s office address, but you may also use your home address if you prefer.
Company formation – which route to choose
You have a number of incorporation service provider options from which to choose to incorporate your UK limited company. The most common options include:
- Direct via Companies House
- From an online incorporation service
- A formation agent
- An accountant or a solicitor.
Your choice of service provider will depend on your preferences and how you feel about managing the company formation process yourself. Each option attracts different costs. Going direct is generally the cheapest option and using a professional the most expensive, although many contractor accountants will include company incorporation as part of their service.
What happens after you register a limited company
You’ll want to start contracting as soon as possible, so after you have incorporated your ltd company, you should open a business bank account and inform the UK tax authority, HMRC.
And if you already have a contract, in the process of setting up a limited company, you’ll need to provide your company name, company registration number, registered office address and VAT registration number to your agent or client so that you can start earning contracting fees as soon as possible.
Because it is possible to set up a limited company very quickly, using a ltd business is a common route for UK contractors.
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