If you have decided to trade via your own limited company, you have to submit an application to Companies House, the registrar of companies. Here, we’ve listed 10 bits of information you need to collect in advance to ensure your formation can be processed correctly first time.
Several ways to set up a company
You can submit your application directly – either electronically via the Companies House website, or by completing Form IN01 manually. Alternatively, you can use a third party to process the application on your behalf – this will typically a formation agent, or your accountant.
The costs do vary; Companies House charges a fixed £12 fee if you apply online, or £40 if you do so via post. Most contractor accountants will set up a company on your behalf, and may charge a one-off fee, or provide this service for free if you are signing up as a client.
However you decide to incorporate your new company, you have to provide the same information to Companies House – even if the format varies between application methods.
Here we’ve listed the information and documents you’ll need to complete the process, and some things to bear in mind before you go ahead.
1. Company Name
This must be unique, and not contain any ‘sensitive’ words or phrases – i.e. you can’t use a trademark in your name, or pass yourself off as something you’re not. It is worth spending some time choosing the right name for your company. Find out more here.
2. Company Registered Address
You must have an address where official mail can be sent. Many contractors simply use their own residential addresses, or you may decide to use a third party service, or even your accountant’s company address for this purpose.
If you’re setting up a company in England or Wales, then the registered address must be within one of these countries. The same applies for Welsh, Scottish or Northern Ireland-based companies – the registered office address must be in the corresponding territory.
3. Company Officials
To form a company, you must have at least one director. You may decide to appoint a company secretary, although this is no longer mandatory. You will need to have all your officials’ names, addresses, nationalities and dates of birth to hand when you apply. If you’re concerned about privacy, directors may elect to use a ‘service address’, so that their residential address doesn’t appear on the public record.
4. Share Structure
You need to decide how the shareholdings in your new company are apportioned. Will you own all of the shares yourself, split them with a spouse, or with other people? Do you require different classes of shares? When you declare dividends, they must be distributed exactly in the same proportion as the shareholdings themselves. You may be wise to discuss the best way to set up your company’s share capital with an accountant.
5. Shareholders
For each shareholder, you will need their name, full address details, class of share, and number of shares they will own. In addition, you will need to provide three pieces of personal information (in lieu of a signature). These include: Birth town, last 3 digits of telephone number, National Insurance Number or Passport number, mother’s maiden name, eye colour, or father’s first name.
6. PSC Register
From 2016, all companies must now keep a record of all ‘People of Significant Control’ – this includes people who own 25% or more of the shares in a limited company, or have 25% or more of the voting rights. Following the initial formation, this information is updated via the Confirmation Statement which all companies are required to submit to Companies House each year, to keep the registrar up-to-date.
7. Articles of Association
All companies must have a set of Articles, which act as a ‘rule book’, and govern all aspects of running a company – including directors’ powers, decision making by shareholders, voting rights, and how dividends are distributed. You can elect to use ‘model articles’ (a generic document), which should be sufficient in the majority of cases.
You can download example model articles here.
Importantly, if for whatever reason you decide to use your own amended articles, you cannot incorporate your company online. You’ll have to use the postal method (Form IN01).
8. Memorandum of Association
This is an agreement which confirms the intention of initial subscribers to form a limited company in the first place, with the following wording:
Each subscriber to this memorandum of association wishes to form a company under the Companies Act 2006 and agrees to become a member of the company and to take at least one share.
This is followed by a list of all subscribers. You can download a Memorandum template here.
When you enter the details of each shareholder during the online formation process, just ticking a checkbox confirms that the shareholder has authenticated the prescribed form memorandum of association. There is no physical document to submit.
9. Standard Industry Classification (SIC) Code
Each trade / industry has a unique SIC code to identify what a business does. You can browse the full list here. Section J is likely to be of most interest to contractors, for example:
| SIC Code | Description |
|---|---|
| 62012 | Business and domestic software development |
| 62020 | Information technology consultancy activities |
| 62030 | Computer facilities management activities |
| 62090 | Other information technology service activities |
| 63110 | Data processing, hosting and related activities |
You can add up to 4 SIC codes to describe your business, although a single code will often suffice for most contractor companies.
10. Further Considerations
If you’re setting up a company directly, you can do so via this Companies House page.
Here are some additional things to consider when setting up a limited company for the first time:
- You should find out what legal and financial obligations company directors have.
- Find out what statutory records are, and how to maintain them. Read this article for more information.
- You need to register for Corporation Tax within 3 months of carrying out business via your company. You may also need to register for VAT. If you’re paying anyone a salary via your company, you will also need to register with HMRC as an Employer. You’ll be pleased to hear that these are all tasks an accountant can do on your behalf – and most specialist accountants will register your company for all relevant taxes as part of the initial company formation process.
- Find out why choosing the right accountant is so important.
No comments:
Post a Comment