The A-to-Z of Setting up a Limited Company: A Comprehensive Guide - ESDG Accountancy

The A-to-Z of Setting up a Limited Company: A Comprehensive Guide

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Ed, Chartered Accountant

Starting a new business is always an exciting adventure. If you’re considering setting up a limited company, you’ve come to the right place! This comprehensive guide will walk you through the process, highlighting the essential steps and answering your burning questions. So, let’s dive in!

Introduction: Why Set Up a Limited Company?

Setting up a limited company has its perks. It offers limited liability, which means your personal assets are protected should the business face financial difficulties. Moreover, limited companies often enjoy tax benefits and a professional image that can boost credibility.

Step by Step: Setting up a Limited Company

1. Choose a Company Name

First things first, you’ll need to pick a unique company name that isn’t already in use. Make sure it reflects your brand and is easily searchable. Remember, your company name is an important aspect of your business identity.

2. Register Your Company

Next, you’ll need to register your company with Companies House, the UK’s official register of companies. You’ll need to provide the following information:

    • Company name
    • Registered office address
    • Director(s) details
    • Shareholder(s) details
    • Memorandum and Articles of Association

3. Set Up a Business Bank Account

Once your company is registered, you’ll need to set up a business bank account. This is essential for managing your company’s finances separately from your personal finances. We always advise our clients to keep their business affairs completely separate from their personal – this gives you greater clarity on your business performance whilst also keeping HMRC happy.

4. Register for Taxes

Your limited company will need to be registered for Corporation Tax. Additionally, if you expect your VAT taxable turnover to be more than £85,000 per year, you’ll also need to register for VAT. Once you have followed these steps you will need to ensure you are aware your necessary obligations for each of these taxes, such as making returns periodically and when to settle any amounts you owe to HMRC.

5. Set Up Payroll and Employers’ Liability Insurance

If you plan on hiring employees, you’ll need to set up a payroll system and obtain employers’ liability insurance. Check out ESDG Accountancy’s payroll services for help with this step.

6. Keep Accurate Financial Records

Maintaining accurate financial records is crucial for your limited company. This includes bookkeeping, annual accounts, and tax returns. ESDG Accountancy’s bookkeeping services can help you keep everything in order. Many of our clients use cloud bookkeeping software packages such as Xero, Quickbooks or Pandle to help save time and keep all records in one place.

FAQs: Setting up a Limited Company

Q: How many shares should my limited company have?
A: The number of shares your limited company should have depends on your business needs and preferences. Learn more in our article on how many shares your limited company should have.

Q: What is the optimum salary for limited company directors?
A: The optimal salary for limited company directors depends on various factors, such as current tax legislation and personal circumstances – although many business owners do fall into the same category. Check out our guide on the optimum salary for limited company directors to learn more.

Q: Do I need a registered office address for my limited company?
A: Yes, your limited company must have a registered office address. You can use a registered office service if you prefer not to use your home address.

Q: What is a director’s loan account?
A: A director’s loan account is an account that records transactions between the company and its directors, such as loans, repayments, and expenses. Learn more about the ins and outs of a director’s loan account in our article.

Q: Can I hold my buy-to-let portfolio inside a limited company?
A: Yes, holding a buy-to-let portfolio inside a limited company can provide tax benefits and limited liability. Read our post on holding your buy-to-let portfolio inside a limited company for more details.

Conclusion: Setting up a Limited Company

Setting up a limited company can be a game-changer for your business, offering numerous advantages such as limited liability, tax benefits, and a professional image. By following the steps outlined in this guide and addressing the FAQs, you’ll be well on your way to establishing a successful limited company.

Remember, ESDG Accountancy is here to help with services like new company formation and payroll to make your journey as smooth as possible. Good luck!

About the author

Ed is qualified Chartered Accountant and founded ESDG Accountancy in 2020. He has gained extensive experience in various sectors, working with business owners, international groups, & private equity investors.