Questions we answer in this guide:
- Is the limited company business model the right choice for you?
- What do you need to set yourself up as a limited company?
- Once you've got your new business up and running, what steps should you take to best look after it?
Setting up your own limited company can be a great move for you and your business.
Maybe you're just starting out, or perhaps you're a sole trader already and you're looking to manage your personal risk position better.
Or maybe you've been operating another type of business model, like a partnership or a collective, and you've made the decision to change.
But before you get started, it's important to ask yourself...
Should my business be a limited company?
Before we get going, and in case you're not absolutely sure whether this structure would be the right fit, you can check out our guide to the different business models available. This explains the differences between operating as a limited company by contrast to a sole trader, or a partnership or limited liability partnership.
And if you've been trading a while and you're looking to grow, perhaps in collaboration with others, you might want to consider franchising, licensing, agency and distribution models, for example – all of which are covered in our guide to alternative business models.
This superguide walks you step by step through the process of setting up a limited company (or a company that is limited by shares, as it's sometimes known).
There is another type of limited company, one that is limited by guarantee. But that model is not included in this superguide.
Companies limited by guarantee are commonly used for charities, community projects, clubs, and collectives or societies.
Unlike the vast majority of companies limited by shares, they're often businesses that are run as not-for-profit companies, meaning they generally don't distribute profits to their shareholders but instead retain the funds within the company or use them for some other authorised purpose.
And instead of standard shareholders, these companies have guarantors, who commit to contributing an amount of money if the company gets into financial difficulty.
If you've taken a look at all of your business model options and have decided that a limited company is right for your business, then this superguide has been designed to make the registration process as simple and stress free as possible!
And to help your newly registered company thrive long after registration we've added extra challenges to complete after you've registration – from selecting a business bank account to checking whether you need any special trading licences.
So are you ready? Let's get started!
What do you need to set up a limited company?
Before embarking on any new adventure, you need to get your kit ready.
As mentioned earlier, there are a number of things to consider and documents to gather before you can register your business as as a limited company.
Your essential kit contains:
- A company name
- An address that you'll be happy to use as your registered address (more on how to choose this below)
- A decision on who will be a director (you only need 1, but you can have more)
- A decision on shares and shareholders (this might be a very simple case of 1 share and 1 shareholder: you, or you might already have others willing to come on board and share the costs (and the ownership) of your business
- The legal documents recording your set up and laying down the rules you'll apply to your business (you'll hear these called a memorandum of association and articles of association)
- Your application form to register your business as a limited company with the UK's official and only registrar of companies, Companies House.
And with that kit (which we'll help you collect) and our guidance, your business will be registered as a limited company in no time!
Step 1: Name your business
You may feel that your name is super important to the future of your business. We did from the outset, but not everyone does – and that's totally fine. But the key thing is understanding the difference between a registered company name and a brand name. They can be the one and the same thing, but they needn't be.
From the outset, what you call your business certainly helps you stand out from the crowd and, if you're concerned about building a brand (which should be on your radar from the start), then you may well want your registered company name to capture the essence of what your business is all about as well. Many people do.
But while it's true that as soon as you're thinking about registering domain names for a website, and establishing a sense of brand through logos, business cards and other materials, your brand name will definitely matter (not least since it will be starting to generate recognition and reputation for you), you do not have to have the perfect name identified to register your company with Companies House. You can change it relatively easily later, (so it needn't be a barrier to getting registered).
Or, you can even leave your original registered name in place at Companies House and simply trade under a different name; one that becomes your brand name (and that one should definitely be registered as a trade mark).
So if you're not sure about how your brand might develop, for now, you could simply pick a registrable name that's acceptable to you, such as Farillio Enterprises Limited – and then, a bit later, start actually trading with a brand name that you've developed, such as Farillio For Business, for example.
If you need some food for thought, our soundbite on the essential things to think about when naming your company could be helpful...
Our guide to why it's worth bothering to getting a trademark registrable name for your business is also worth a read.
Start with Companies House
Don't forget - before you get too attached to your name, it's a very good idea to check that it hasn't already been registered by someone else! If it has, this would mean that you wouldn't be able to use that particular name - it simply won't be available at Companies House, and there'll be no way to register it.
Companies House has a free name checker service on their website so you can get checking right away. They also have a list of sensitive words that you'll not be able to include in any registration. These include offensive words, names that imply a connection with the government, or names that include words such as British, tribunal or institute. You can check out the full list here.
And if the name that you want is not available at Companies House, that could well be a warning sign that someone else is also trading under that unavailable name and has a brand related to it too. If they do and you start trading using their brand name, they may be able to attack your business for trade mark infringement.
If the name is available at Companies House, that's a great start. But it's only one step to confirming that you can have that name as a recognisable and legitimate brand and trading name.
Next, ask Google
So now you should do an internet search on the name you'd like and see what comes up. Search globally, not just locally, because international brands may have trademarks existing outside the UK that are identical or similar to yours and they may well challenge you in your application to register your company name as a trade mark. The internet is great for identifying whether other similar or identical brand names exist.
Always check dictionary definitions – especially the online ones
The internet is also very useful for turning up any unhelpful urban, slang or other dictionary definitions of the name you may have chosen (and if it has a meaning that you'd rather not be associated with your business!)
Now check whether it might infringe someone's trademark (and if you could make it your own trademark)
You can check the Intellectual Property Office's website to see if there's a clash anywhere with the name you've chosen. Our guide to the benefits of getting a trade mark registrable name will walk you through what to expect here.
Is the domain name available?
You'll also want to check that the website domain name is available. There are a number of sites offering domain name search services – although you should only need to search one, as they pull off the same databases. Two websites you can use to undertake a domain name search are: nominet.uk and whois.net
If you decide that you'd like any help carrying out any of these checks, our Speak To A Lawyer service is always on hand.
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