Statistics from the government show the number of incorporated companies in the UK increased by 16.5% in 2023. With more companies registering through Companies House, setting up your limited company may take forever.
You can expedite the company registration process with little to no cost by setting up a limited liability company. This post provides an in-depth overview of the cheapest way to set up a limited company in the least time possible.
1. Choose a Viable Business Structure
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A business structure describes the legal organization of your company and its operations. The correct choice allows you to setup limited company in less time in the UK. Structures have varying legal and monetary obligations and implications if a loss or dissolution occurs.
In private limited companies (LTD), shareholders control the company operations and have limited risk. A single shareholder needs at least £1 of share capital in your company. On the other hand, public limited companies (PLCs) need two directors, shareholders, and a company secretary. Each shareholder should have a minimum share capital of £50,000.
2. Select a Company Name
Create a suitable company name that is non-existent and non-offensive. Last year, Companies House rejected over 800 company names due to their potentially abusive nature.
At the least, identify three company names for your business. It will give you more options if one name is offensive or already exists. Use the company name checker to check if your company name is original and available.
3. Prepare the Registration Documents
Before registering your company in the UK, you must present legal paperwork. Two documents required during registration are a Memorandum of Association (MOA) and Articles of Association (AOA).
An MOA has the signatures of the shareholders and partners. It indicates that they agree with the company formation. Conversely, an AOA outlines the rules and regulations of your newly formed business.
Other essential documents required for a quick registration include:
- Form 10 – it contains the company name, address, director and secretary names, and shared capital
- Form 12 – a legal statement showing the company follows all company formation requirements in the Companies Act
4. Appoint Company Officials
Every company needs a governing hierarchy. They are responsible for the firm management and regulatory compliance. The following are the key individuals to include in your limited company.
1. Director
The UK requires limited companies to have at least one company director. They must be over 16 years old, qualified for the directorship, and have permission to be a director if bankrupt.
The functions of a company director include managing day-to-day operations and making crucial strategic decisions. They also act in the company’s best interest. If an issue within the organization arises, they inform the company shareholders.
2. Shareholders
Private limited companies in the UK must have at least one shareholder. On the flip side, PLCs need two shareholders. Company shareholders can be individuals, institutions, or entities with a stake in the organization.
The company shareholders receive distributed shares in three classes, namely; ordinary, preference, and redeemable. Each share category grants shareholders special administrative rights, such as voting rights, dividend payments, profit shares, and convertibility.
3. Secretary
While a company secretary is essential, you may not need one in the UK. Secretarial duties include helping the directors with some of their roles. Examples of secretarial responsibilities are as follows.
- Keeping the company documents safe
- Filing company paperwork
- Managing financial documents
- Communicating with regulatory bodies on behalf of directors and shareholders
4. People with Significant Control
People with significant (PSC) or majority control reap the benefits of the business and incur losses if the company fails. Provide details on your company PSCs in your paperwork. That includes their name, birth date, nationality, and the date they acquired a majority stake.
Also, include their share capital and company voting rights. In many cases, PSCs own over 25% share interest and voting rights. It gives them the power to appoint and remove existing shareholders.
5. Select a SIC Code
All businesses in the UK must have an SIC code. It shows the industry to which your company belongs and its core business activities.
Get a SIC code from the Nature of Business Standard Industrial Classification Codes provided by Companies House. Filter the list of codes by keywords or subcategories to find your specific SIC code. Include the code in your registration documents.
It costs £12.48 to register a limited company in the UK. It is the only fee to pay Companies House during registration.
To Summarize
Setting up a limited company in the UK can be time-consuming and costly, especially for first timers. You can simplify the registration process with the tips in this blog. Choose a business structure, name, and SIC code for your company. Also, prepare all documents, including the Memorandum of Association and Articles of Association, and appoint relevant company officials.
Remember that Companies House receives thousands of applications, and patience is critical. Also, you might spend more than the application fee during registration to print copies of the company documents.