Business

Starting a business in the UK – How to set up a limited company

Most people in the UK opt for limited partnerships. There are different reasons for this. Although forming a sole proprietorship requires less paperwork, in reality, if you are new to this field, it is better to start your business as a limited liability company. The two main advantages of the limited partnership are a reduction in the amount of tax expected from your business and greater protection for your personal assets in the event the business goes into debt.

The name is the main thing one decides when starting a company. Companies House in the UK keep a list of all companies and you can simply go to their website and check if their ‘name’ already exists. But whatever the name, it should always end with the world Limited or its abbreviation ‘Ltd.’ A limited partnership also needs two important positions from the start. The first of these two is called the ‘director’. The other is the ‘company secretary’. The secretary can also be the director of the company, but then he cannot be the sole director. The company secretary is vital to the proper functioning of the company and in this sense has more power than the director. He is expected to submit annual returns and tax details to the Chamber of Companies. He has the right to ensure the daily operation of the company.

When two people form a limited company, normally the two responsibilities are shared by the two people respectively. Often the role of director is also given to the secretary’s spouse or family members. There is also another option available for new entrepreneurs. They can use the professional services of a third party who does the same work that a conventional secretary does for a company. They do it most sincerely for a nominal annual fee. The next function is to decide the number of shares of your new company and the price of each share in the market. These shares are sold to people who want to invest in this company. They typically become shareholders of the company and earn dividends on the company’s profits. Unsold shares are called ‘unallocated shares’.

There is something called an “out of the box company”. These are ready-made companies formed by company formation agents. You simply have to pay them the necessary fee and transfer the company to your name. However, there are certain issues like a default company name that cannot be avoided. Of course, you can officially change the name for a fee.

To summarize, starting a business in the UK requires knowledge of certain rules and regulations. So make sure you know about them before you go live.

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