How to set up a Limited Company in United Kingdom 2021
- 1 How to set up a Limited Company
- 1.1 What is a limited company (LC)?
- 1.2 Advantages of Setting up a Limited Company UK
- 1.3 Cost of setting up a limited company
- 1.4 Steps to Set Up a Limited Company:
- 1.5 Final Thoughts
How to set up a Limited Company
It is the step-by-step guide to setting up a Limited Company. This guide details everything you need to know about starting a business in the United Kingdom. For beginning business in the United Kingdom, you need to set up a Limited Company.
If you live outside the United Kingdom, are a non-resident, or UK citizen residing outside the United Kingdom. A company in the United Kingdom can boost the reliability of your business, increase access to investors and the United Kingdom Market.
If you are not a UK resident and considering starting a business in the UK. In that case, you might be frightened by the amount of work required.
Doing it from outside the UK seems like a difficult task, but it’s totally doable when you break it down. In this in-depth guide, we will discuss the steps to set up a Limited Company as a non-UK resident in the best possible way.
What is a limited company (LC)?
It refers to a legal structure for your business that makes sure that a company’s liability is limited to all members considering that there is no legal contract between an individual trader and his company. This is useful for businesses that take a considerable risk.
This business entity is most common in the United Kingdom. In a different part of the world, this business entity knows different variations such as Ltd, LLC, PLC, and AG.
Advantages of Setting up a Limited Company UK
The best business entity to start a business in the United Kingdom is a limited liability company. Over 2 million businesses set up a Limited Company in 2020. New entrepreneurs need to know the variety of advantages and dangers of different business entities in order to determine if they are suitable for their business idea. Some advantages of set up a limited company are following:
- Running a business through a limited company is the most effective tax-suited option compared to other business forms.
- If you are operating a limited company, your business seems more professional than other business entities.
- Working as a limited company usually provides customers and suppliers a sense of trust in a business. Other companies typically prefer not to deal with public companies.
- Limited company owners having the advantage of complete administration of your financial matters in other businesses have many money-risks.
- It is clear that running your business with a limited company is more financially beneficial, which is fair when you factor in the job’s added responsibilities and lost benefits.
Cost of setting up a limited company
There are more legal responsibilities and obligations to run a business as a limited company than a sole trader. It is essential to determine whether corporation status is necessary for the type of business you are running.
Formation of the limited company through company house costs £15. You will have cost £40 if you present a paper application using the IN01 form (obedient to an 8-10 day turnaround time). All Companies House services have been temporarily delayed due to the coronavirus outbreak. For same-day formation, you will need to pay £100.
It is not very difficult to set up a Limited Company, but if you are fully aware of company formation, setting up a Limited Company is challenging.
But don’t worry, there are hundreds of formation services available online. The best company formations company is 1st Formations. They charged £12.99 to set up a limited company.
A significant number of entrepreneurs prefer to set up a company through their accountants. You need to hire an accountant. There are multiple freelance sites where many professional accountants are available.
Steps to Set Up a Limited Company:
1. Is setting up a limited company right for your business?
The first step is to examine set up a limited company is right for your business.
A sole proprietorship is the most common legal entity for businesses in the United Kingdom. More than 3.5 million companies are formed by sole traders.
It is pretty simple to set up a limited company as a sole proprietor. It has approximately a few legal hurdles. Limited Company is best for those businesses that need to get started fast. The limited company having 59% of all companies in the private sector.
But, we clear that in this guide that individual traders possess unlimited liability, which explains that they are personally responsible if something goes awry. If we talk about taxes, doing business as a sole trader can not be very beneficial.
2. Choosing a business name
Once you plan to set up a limited company, You will need to select a good and unique business name for your company. Establishing a business name for your company is not an easy task while choosing a name for your business, you should consider a catchy brand to attract your customers.
Our suggestion is to spend a bit of time choosing a company name, so do not goes with the first one you think, instead of this you should select 10-20 names and then select which is one is better or suit your brand.
This guide will help you in selecting a name for your business.
- You should also consult your employees, friends and family members to choose a company name.
- You should purchase a domain name in the name of your company.
3. Completing the company formation process
To set up a limited company in the United Kingdom, you need to follow these steps:
- First of All, You need to purchase three addresses: the Register address, Director’s address, and the Business address, which approximately cost £88 if you buy from this service provider, which is highly recommended. If you use our unique discount code (392777) when you buy, you will get 10% off on your purchase.
- In this step, you will order a UK SIM ( Use GiffGaff ) at your UK address and get forwarded to your home address. We suggest you use Vyke (Virtual UK Number).
- Register your UK based Limited company at HMRC-Gov-dot-uk) which costs £12 one time fee.
Once you complete all the following steps, It usually needs 24 hours for Companies House to process your application, so it takes one working day to process your application.
By reading this in-depth guide, you will know how to set up a Limited Company in the United Kingdom. It is not a very big task, but if you have no time or are entirely unaware, you should try the Micahguru Company Formation Services, which offers invaluable services helping 150+ entrepreneurs start their businesses.