How to form a limited company
Although you can set up a company using your own resources, it is normally advisable to use a specialist limited company formation agent. You first need to decide on the following:
- Whether the company is to be a private or public company limited by shares, or a private company limited by guarantee
- The purpose of the company and its capital requirements
- Whether the proposed company name is available and acceptable
Limited company incorporation procedures
You will need to complete the following forms:
- Statement of first directors, secretary, and registered office (Form IN01 – Application to register a private or public company)
- Memorandum of Association, including details of the subscriber(s)
- Articles of Association, including relevant rights and restrictions on shares of each class (if more than one), and conditions relating to directors.
Send the completed forms to Companies House. Payment can be made by either credit or debt card or by using PayPal. Your company can be registered online for a fee of £15.
Following this, the certificate of incorporation should be issued. A private company may begin trading activities from the date of issue of this certificate. It is also possible to form a limited company using Companies House online services, with payment made by debit or credit card and the certificate of incorporation issued electronically in PDF format, normally within hours.
If formation agents have been involved, they will normally provide copies of the relevant documents, together with suggested minutes for the directors’ meeting, a form AA01 – change of accounting reference date, and forms SH01 (Return of allotment of shares). They usually also supply the Statutory Book – a combined register, and minute book (in loose leaf or bound form), and some blank share certificates.
Post incorporation matters
First meeting of directors
Once you receive the Certificate of Incorporation, you should hold a first meeting of directors to deal with the following matters:
- Appointment (if appropriate) of a chairperson, managing director, and any additional directors, and approval of any employment contracts
- Appointment (if appropriate) of auditors
- Issue of share certificates and, if appropriate, allotment of further shares
- Approval of banking arrangements, including agreeing authorised signatories in respect of the company’s bank account and passing the resolutions required by the bank
- Approval of any business contracts
- Disclosure by directors of their interests in any contracts made with the company
- Disclosure in writing by the directors of their interests in shares or debentures of the company and associated companies
- Adoption of an accounting reference date
- Convening of a general meeting (if required)
First general meeting
A first general meeting of the company will be required:
- To approve any substantial property transaction between the company and any of its directors
- To approve any directors’ service contracts to be entered into for terms exceeding five years
After the first board and general meetings, you should make the following returns to the Registrar of Companies:
- Return of allotment of shares
- If necessary, Form AA01 (Change of accounting reference date). Failure to notify a change will result in the company’s accounting reference date becoming the anniversary of the end of the month of incorporation
In special circumstances you might have to make the following online updates:
- Notice of increase in nominal capital
- A copy of any new or altered Memorandum or Articles, and special resolutions passed
- Notification of place where copies of directors’ service contracts or memoranda thereof are kept (UK companies only)
- Notification of place where register of directors’ interests in shares etc. is kept where appropriate (UK companies only).
- Minutes of the first board and general meetings should be prepared
- The company should issue share certificates
- The company’s statutory books should be written up
- Shareholders should pay their share capital into the company’s bank account
- Consider proposing elective resolutions to dispense with the need for annual general meetings and the laying of accounts and reports before a general meeting
- Consider using written resolutions in place of general meetings
- Don’t forget to register for VAT, if appropriate
- Register the name under the Companies Act 2006, the Company, Limited Liability Partnership and the Business (Names and Trading Disclosures) Regulations 2015.
If you start working as self-employed, you must register with HMRC. You can do this online at any time up to 5 October of your business’ second tax year, although it is best to notify HMRC as soon as possible so you keep up-to-date with your obligations as they arise.
Many of the communications with Companies House are now possible online and a receipt is issued once you have completed the task.
Talk to limited company formations specialist
Please contact us if you would like us to help you to set up a limited company. Our accounting firm is based in Milton Keynes but we have clients across the Buckinghamshire area.