Business

How Do I Set Up a Limited Company (Ltd)?

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So you’ve come up with a great business idea, proved that it will work (this is also called proof of concept), and hopefully made your first sale!

Now it’s time to get you set up as a Limited company, but why?

Legal Protection

Setting up your Limited Company protects you as an individual from your business, by creating a separate business legal identity.

So if your business runs into trouble, it shouldn’t affect your own personal finances.

We should never forget that our business should be bigger than us.

If your business absolutely NEEDS you, then how are really creating personal freedom or financial freedom? You’re trapped & you’ve pretty much created your own personal prison.

The moment you take a day off, your business will completely stop running. That makes absolutely no sense!

Professional Credibility & Protection

With a Limited Company you will have your own unique company name, it’s yours and all yours!

Being a Limited Company can also show that your business has credibility. This is really important as some suppliers and customers won’t work with businesses that aren’t Limited Companies.

Tax Benefits

Sole Traders & Partnerships pay income tax, Limited Companies pay corporation tax! Corporation tax is usually lower than income tax, so you pretty much get some great tax benefits for just setting up a Limited Company

So, How Do You Set Up a Limited Company?

Ahh it’s so easy to set up your own Limited Company! I’m going to quickly show you how to get it all set up in less than 15 minutes.

Choose a Company Formation Website

Company formation websites make it really easy for you to set up your new limited company (Ltd). They make it so simple, it’s just like filling in pretty much any online form and will cost you somewhere between £9.99 & £29.99.

These are my favourite Company Formation websites:

Your Company Formations
My New Favourite

These guys have become my new favourite as their service is so easy to use. They have a little tool which allows you to search for the perfect new company name. Plus they are really cheap, £12.48 for their digial company formation pack.

Companies Made Simple
Cheap, Quick & Easy

These guys make forming your new company really easy. Their company formation packages start at £15.99+ VAT and they usually set up your new company within 1-2 working days.

Pick Your Company Name

This is one of the most fun parts of setting up a Limited Company, you get to choose your own company name.

If you choose one of the company formation websites that i’ve recommended, you will be able to just type and search for your perfect company name and see if it is available. Quick & simple!

Complete the Company Formation Steps

Now, you just need to follow the steps on the website, this is also called the incorporation process!

Usually you will have to add details about the office address that your business will run from. This is also called your trading address.

Then you will have to fill out the details of the Directors of the business. These are the people that will manage your business.

You can be the only Director of the business, there is definitely nothing wrong with that.

Lastly, you will have to fill out the details of everyone who owns the business & how many shares they hold, these are called the shareholders.

Once again you can comfortably be the only shareholder of your business.

You’re always asked how many shares you would like to issue & their value. Forget your ego here and keep it simple! I normally recommend creating 100 shares @ £1 each.

Now, why should you do this?

  • It’s easy to split, so if there are 1, 2, 3…10 shareholders of the business you know how many shares everyone should have without needing to grab a calculator.
  • Protection, if the business doesn’t go well you limit how much money you can be held personally responsible for. This is also called limited liability.

What happens After I Complete The Process?

After you’ve completed the formation process & paid the formation fee using one of the websites I’ve recommended, it will usually take 1 to 2 working days for Companies House to create your new business.

Normally you will get an email telling you that your new limited company has been created!

You will also get three important documents that you need to keep safe:

  • Certificate of Incorporation
  • Memorandum of Association
  • Share Certificate

Now you’re good to go & after 1 working day you’ll be able to open up a new bank account for your new limited company.

Checkout out my quick guide to opening a business bank account in less than 15 minutes.

Or if you’re lazy…these are the best business bank accounts in my opinion:

Revolut Business Account
Great for International Businesses

If you do business across multiple countries getting a free Revolut business account is a pretty good shout. All you need to do is download the app & sign up. It's full of cool features like unique bank accounts for individual currencies.

Starling Business Account
Award-Winning Business Bank Account

Pretty much what is says on the tin: an award-winning business bank account for limited companies and other registered businesses; one with world-class features that save you time and money while you run the show.

Tide Business Account
Open An Account in 15 Minutes

I'm a big fan of Tide. They pretty much make it effortless to open up a new bank account for your business. All you need is a phone and the app. It's doesn't get much better. Oh..and it's free app!

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