Limited Company by Shares
Limited company means the business is a separate legal entity, has separate finances. Limited company by shares, means the company has shares and shareholders, can keep any profits it makes after paying tax.
If you run business as a private limited company (Ltd), means you are a shareholder; you hold all or a proportion of the company’s share capital. You serve the company as its officer as a director. You’re not personally liable for the firm’s debts as company finances are separate from your personal finances.
Limited company registration
Setting up in business as a limited company involves a more complex formation process, and there are more reporting and management responsibilities. You’ll need:
- Choose suitable company name.
- Check SIC code of your company’s nature of business.
- Provide an official physical address in the UK.
- Appoint at least one company director.
- Need at least one shareholder, who can be a director.
- Identify people with significant control (PSC) over your company.
- Prepare documents agreeing how to run your company.
All companies limited by shares must have at least one share. Most small limited companies elect to have ordinary £1 share.
Directors of UK companies can live anywhere in the world and they are not required to be UK nationals, so you can run a British company from any country.
Once you have these details, you can register your company with Companies House. Keep in mind there is a registration fee. You’ll get a ‘certificate of incorporation’. This confirms the company legally exists and shows the company number and date of formation.
After you’ve registered your company with Companies House, you will be registered for Corporation Tax at the same time and you will receive a letter from HMRC. You’ll need to register with HMRC for Corporation Tax service within 3 months of starting to do business.
As a director of a limited company, you are legally responsible for running the company, you must:
- follow the company’s rules, shown in its articles of association,
- keep company records and report changes,
- file your accounts and your Company Tax Return,
- pay Corporation Tax.
You can hire other people to manage some of these things day-to-day (for example, an accountant) but you are still legally responsible for your company’s records, accounts and performance.
Company and accounting records
As a director of a limited company, you are legally responsible for making sure company accounts and reports are properly prepared, you must keep:
- records about the company itself, for example:
- details about directors, shareholders, people with significant control (PSC)
- loans or mortgages secured against the company’s assets
- financial and accounting records, for example:
- details of assets owned by the company
- all money received and spent by the company
You need to check that the information Companies House has about your company is correct every year. This is called a confirmation statement (previously an annual return).
You must keep records for 6 years from the end of the last company financial year they relate to, or longer if required.