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Procedure To Establish A Limited Company

If you want to set up a business having less risk and want to protect personal assets from different liabilities, then in such a situation, the best option is forming a business under the category of limited liability. Each type of company has certain advantages and disadvantages. If you want to set up a business having less risk and want to protect personal assets from different liabilities, then in such a situation, the best option is forming a business under the category of limited liability. It is also known as a limited company.

To sum it up, a limited company limits your liabilities. The need for paperwork for a limited company is high, but it saves you from financial liabilities. This means that if your business fails, the owners will not be responsible for it. This is not the case in a sole proprietorship. A limited company can have a single owner or company director, or multiple shareholders. It depends upon the owners and size of the business.

Legal procedure to set up a limited company 

To set up a limited company, there are certain legal procedures that are required. The process is generally done by the director of the company. So, the company must have a minimum of one director to run the business. Some of the requirements are-

  • The company director is required to file an annual return with the company’s house. Points to include:
  • Details of directors of the company
  • location of the registered office
  • the share capital of the company along with shareholdings.
  • The director has to submit the company’s annual accounts to the company’s house.
  • An annual corporation tax is submitted by the director to HM Revenue and Customs. It is mandatory to pay corporation tax within nine months of the end of the accounting year of the company.
  • If the company exceeds the mark of VAT, then it has to get registered for VAT. It is completed online.
  • Everyone has to pay the income tax. There are situations where the owner operates the payroll of the company. In such situations, one must report the payments of employees. Then they have to pay what they owe to HM Revenue and Customs monthly. Apart from legal requirements, when setting up a limited company, one needs,
  1. Registration of business
  2. Deciding the officers of the company
  3. Filling of registration documents.

Procedure to set up a limited company

It requires a lot of effort to set up a limited company. It is a full procedure, and one cannot think of committing any kind of error in this process. The process is as follows-

  • Business Name- 

Registration is the first step when setting up a limited company. That is why it is important to decide on the names of the businesses. The new company cannot have the same name as that of any of the registered companies. This would be in direct violation of the Trade Marks Act of the United Kingdom.

Before finalizing any name for your business, do thorough research on business names. One should see that the name you are considering is not registered already. One can search the company’s house register to get the name of the companies having similar names. One can search the website of an IPO  to check for the registration of the name under UK Trademark law.

One has to adhere to certain rules when deciding the name. It should not contain misleading words like: 

  1. Charter
  2. Bank
  3. Royal
  4. Scottish
  5. British
  6. English

For a full list, check the guide of the government. The name you choose for the company should always end in limited or Ltd. So, the people should have a clear sign that it is a limited company.

  • Company Officers- All limited companies must have at least one company officer. He is responsible for all business affairs. Company directors and secretaries are two of the company officers. One cannot be a company director if he is undischarged bankrupt or disqualified by the court of law from holding the directorship. He must be above 16 years of age. One cannot become a director if he/she is below 16. In big companies, company secretaries get employed. They are generally qualified accountants, barristers, or advocates.
  • Registration- it is the last step to set up a limited company. Registering a company requires a series of documents, and the registration process is the most important. The owner of the company can also do it, or one can hire an agent for it. It is totally up to the discretion of the owner.


The setup of a limited company is a task that requires a great amount of paperwork, but it is not that hectic, and one can easily do it if one follows the procedure accurately.

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