Step-by-Step Guide to setting up a Limited company
Updated: Nov 20, 2020
Are you starting a new business? Has your supplier asked you to go Limited? Well, you will find a step-by-step guide on what to do if you are setting up as a LTD company here.
Firstly, you will need to choose your company name. There are many names taken at companies house, and many names that sound like other names, hence it is advisable to have a look to make sure you are choosing something individual and describes your business. Sometimes people receive letters in the post requesting a change your trading name within 14 days, or legal proceedings will commence so, please be careful that you are not encroaching on someone else's brand name. There are companies on the internet that can incorporate a company for you for a small fee, but the process is simple using Companies House. It can be completed quickly and directly by clicking here.
When buying your company name, you will be asked to choose your SIC code. This may sound ominous, but it is the 'standard industrial classification' of your company, for example, Shortandsons.co.uk has a SIC code of 'Accounting and Auditing'. If in doubt, check the SIC codes for your competitors on Companies House. Registering costs only £12.
When you register at Companies House, request your online filing authentication code and keep it safe. It is used for making online changes to a company address at Companies House or changing the company share structure. Request your CH Authentication Code.
Once you have your Company Name, you can now register for your UTR. Your UTR is your Unique Taxpayer Reference for your company, and shouldn't be confused with your personal Unique Tax Payer Reference. You can request your UTR for a Limited Company online.
Extracting money from your company is easy if you have put in your own money in the start-up process. The money you have deposited is a loan from you, so no tax is payable on taking the initial funds back. After you have taken back the money you are owed from your company, you can create dividend vouchers to release money or start a PAYE scheme.
Dividend Vouchers are relatively simple to create and need to have
Name of the company
Company registration number
Date of issue
Name and address of shareholder receiving the dividend
Amount of the dividend payment
Signature of authorising officer.
One important item to note is that dividends can only be paid from company profits, so it needs to be managed carefully, as the dividends taken through the year could be more than the company profits at the end of the year - this creates what's known as an illegal dividend. It may be less problematic to release income through PAYE reporting. Also, dividends are only available to Shareholders, so you can't create a dividend voucher for someone who isn't a shareholder.
To pay yourself a wage through PAYE, you will need to register as an employer, you can do that by clicking here. Registering as an employer means you will need to submit a payroll every month, whether you intend to extract money through PAYE or not. It isn't a time-consuming thing to do, but it is important to submit your Real-Time Report to HMRC, so there is no penalty waiting for you if you happen to be on Holiday over the date you normally make your payroll submission.
Once you have your UTR, you can register online for VAT. If you do not expect your turnover to exceed £85,000, you are not obliged to register for VAT. However, you can do so if you wish.
One last thing, please keep the above letters and codes safe, as getting duplicates is sometimes difficult.
If you need any help with any of the above, please don't hesitate to get in touch or leave your details at the bottom of our homepage to keep up to date.