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What is a Limited Company?

Most people require setting up a standard limited company, as this is suitable for nearly all types of trading. We will be happy to tell you more about the advantages and disadvantages of a private limited company.

A limited company is a form of business legally separate from its shareholders and directors. Even if a limited company has just one person as its shareholder and director, it remains a legal entity separate and distinct from that person. The company can enter into contracts, and can also be sued, in its own right.

The company owners are protected by “limited liability”, hence it is a “limited” company. Apart from a case of fraud or other serious wrongdoing, the owners are liable for the business's debts only up to the value of their original investment.

Three main types of a limited company in the UK are a private company limited by shares, a private company limited by guarantee and a public limited company.

What is a Private Company Limited by Shares?

Most UK limited companies are established as private companies limited by shares. This is an ideal choice for freelancers and contractors who want to start companies.

Such companies are owned by shareholders who have certain rights. Shareholders must appoint directors to manage day-to-day business activities on their behalf. To set up a company limited by shares, only one shareholder and one director is required and the same person can hold both positions.

An individual share may be of any value. You can choose a low share value (for example, £1) to limit the shareholders’ liability to a reasonable amount. Ordinary shares are the most common type of shares which give a shareholder the following rights:

• One vote per share on company decisions.
• Receive a share of profits as dividend payments.
• Receive a share of capital, for example if the business closes down. 

Must I Sign Documents When Registering My Company?

Not on paper: It is all done online to make things simple. No printing or scanning is required.

Do I Need to Register for VAT?

If your company turnover exceeds the VAT registration threshold of £85,000 then you must register for VAT with HMRC (Her Majesty’s Revenue and Customs). You may make an optional application for VAT registration before and/or without reaching that level, however, so that you can claim back the VAT that you have paid on your purchases.

Sole Trader or a Limited Company: Which is the Best Option for Me?

When setting up a business and deciding whether to operate as a sole trader or limited company, there are a few key things to consider, such as tax, liability and control.

Sole traders are self-employed individuals who run their businesses in their own name. This means that they are personally liable for any debts or losses incurred by the business. However, sole traders also have more control over their businesses than limited company directors. They can make all the business decisions without consulting with anyone else.

Limited companies are legal entities in their own right, separate from those who own and run them. This means that the directors of a limited company are not personally liable for the business's debts. However, limited companies do have to adhere to specific rules and regulations, and the directors may have less control over the business than a sole trader.

How Do I Set Up a Limited Company with Multiple Share Classes?

Although most companies have only one type of share, different classes of shares can be created, each with distinct voting, dividend, and/or capital rights. While each class could be given a descriptive name, it is common to label multiple share classes as “A” shares, “B” shares, and so on (e.g., "C", "D" shares, etc.). Examples of different share classes include:

• Ordinary shares
• Non-voting shares
• Redeemable shares
• Preference shares
• Management shares

We support online company formations with multiple share classes. As part of the formation process, you will need to name each class of shares and document the particulars prescribed for each.

It is essential to seek appropriate legal and taxation advice for the company and its shareholders when setting up and documenting a complex share class structure.

Where Can I Find My Company Registration Number?

Your Company Registration Number (CRN) is unique, consists of 8 characters and is shown on your company’s Certificate of Incorporation.  Companies House will have automatically assigned this number to your company when it was formed.

Your CRN can be found also on any official documentation that you receive from Companies House and by searching for your company by name on the Companies House online public register.  You are welcome also to get in touch with us if you have trouble finding your CRN.

You must display your Company Registration Number on all company stationery, websites and other online material.

How Do I Get a Company Unique Tax Reference?

Your company’s Unique Tax Reference (company UTR number) is used to identify it for tax-related purposes. You will have been sent a letter confirming this specific ten-digit reference number and guidance on your tax responsibilities to your registered company address.

Once your company is registered at Companies House, HMRC will be notified of its existence automatically. Within 14 days of registering your company you will receive a letter from HMRC that will give you your company’s unique taxpayer reference.

You should also find this reference number on other statutory communication you receive from HMRC. Your company Unique Tax Reference should not be confused with the personal Unique Tax Reference number that people receive when they register for self-assessment.

Can I Add My Own Articles of Association When Forming a Limited Company?

Yes, you can add your own articles of association when forming a limited company. We charge an administration fee for this service.

Adding your own articles of association is a way of customising the rules that govern your limited company. This can be useful if you want to add specific provisions that are not covered by the default rules set out in the Companies Act 2006.

If you are thinking of adding your own articles of association, we recommend that you seek professional legal advice to ensure that the provisions you include are valid and compliant with the Companies Act 2006.

Do I Need Proof of ID for Company Formation?

As a UK company formation agent, we follow “Know Your Customer” (KYC) rules and, consequently, need proof of identity and address for our customers.

If you live in the UK and open a limited company, we will use the details from your order form to check your ID and address. Most of our customers (90%) pass our digital ID checks.

However, if you cannot use our digital ID check or do not pass it, we will email you a request for the required information and documents. For more details, you can check our ID requirements.