North East Connected

How To Set Up A Limited Company In Four Easy Steps

Starting a new business could be, perhaps, one of the hardest but most rewarding things you will ever do. There are so many challenges you have to overcome when you want to set up a new business. Once you figure out the type of business you want to do, you will then have to deal with registration and legal stuff that are associated with starting a new business.  Surprisingly, more than 90% of UK residents have no idea how setting up a business in the UK works.

In fact, one of the reasons why most people give up on their dream of having their own business is because they don’t understand how to open a new business. The process can seem complicated if you have no one to guide you. Besides, if you set up the wrong type of business, this could affect you in the future. A recent study showed that most UK companies failed because they set up the wrong type of business. Once you have a business idea, you need to know the type of company you should register.

Type of Business You Need To Register

According to recent data released by the UK government, small and medium enterprises (SMEs) are the backbone of the UK economy. As of 2017, there are about 5.7 million SME’s operating in the UK. Together, these companies employed over 16.1 million people and contributed over £1.9 trillion to the UK economy in 2017.

Your company is an SME if you employ less than 250 people. However, the most popular type of company today in the UK is a sole proprietorship (3.4 million), partnership (414,000), and 1.9 million limited liability companies. If you want to register a company, we would recommend you look into registering the company as a limited liability company because of so many benefits that come with it.

Why Limited Liability Company?

Limited Liability Company allows you to easily define your brand and your goals to clients and investors. Besides, it also gives you an opportunity to own everything you do, run your new business in the most tax-efficient way, and be able to attract investors, loans, and clients easily compared to when you are a sole proprietor and thinking about company formations UK.

Four Ways To Set Up Your Limited Liability Company

  1. Decide On The Type Of Company You Want to Register

In the United Kingdom, a limited company comes in 2 forms. This could be:

If you are a small startup or just a freelancer, we would recommend you choose the option of “Private Limited Company”. You just need a minimum of 2 shareholders and share capital of £50,000 to set up this type of company.

  1. Choose An Appropriate Name

Remember that your business name is your brand. Make it meaningful, impactful, easy-to-remember, and above all, unique. Have fun with this process. You can recruit friends or even seek the services of professionals in choosing the right name for your company.

  1. Register Your Limited Company

Most potential business owners find this process a bit frustrating. However, it is not as difficult as you may think. You can find all the information you need on the Companies House (the UK government) website. All you need to do is register and provide personal details about the company director and the nature of the business you have in mind.

  1. Finalize the Incorporate Process

To finish setting up your business on the Companies House website, they will need you to sign and submit some documents. Some of the documents you need to submit include:

Companies House provide the information on their website about who should sign each of these documents. Once you submit all the required documents, you will get information whether you need to submit additional documents or not.

Final Words

A company formation is quite an easy process if you are willing to give it a try. However, we understand that you may want to focus more on running a business and avoid the paperworks. In this case, there are several company formation agents in the UK that can help you set up your company.

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