Setting up your limited company
Choosing a company name
When it comes to your company name, you have an opportunity to showcase your unique offering in a creative way. This being said, you may feel it is more appropriate and professional to use your own name e.g. John Smith Associates Ltd, or incorporate part of your address e.g. Carlton House Limited. Try to avoid using the word ‘consultancy’, because it might tie you down in respect of future work.
Once you have selected a name, you should check it on the Companies House website to see if it is available. There are restrictions on the use of ‘sensitive’ words such as ‘International’, ‘Global’ or ‘Association’ and you can find a list of these on the Companies House website.
Once you have checked that the name is free, we strongly recommend that you purchase a matching domain name, even if you do not wish to have a website at the start. You can do this at Heart Internet.
Officers, addresses and documents
All companies must have:
- At least one shareholder – The shareholders own the company
- At least one director – The directors are legally responsible for the way that the company is run
- A registered office – Usually the accountant’s office (see below)
- A registered accounting year end – Which can be changed
- Company documents i.e. Memorandum and Articles of Association, Certificate of Incorporation, Share certificates, Statutory books – Your accountant should look after these for you
Although a company secretary is no longer required for a small company, you should appoint one to handle paperwork from HMRC and Companies House (e.g. your accountant). Competex acts as company secretary and registered office for all its clients, and handles all HMRC correspondence on their behalf.
We suggest that you set up your company with £100 share capital, which you must pay into the company bank account.
If some or any of your earnings will not be subject to the IR35 rules, you should consider the most appropriate allocation of shares taking account of the income of the shareholders and how you would want them to benefit from any dividends that might be paid. As this has potential for tax savings, we suggest you take advice from a specialist accountant such as Competex on the best setup for your personal circumstances.
Rules on company communications
When you are designing your company documentation, you should be aware that the information to be included is regulated by the Companies Act. Company letterheads must include the following:
- The name of the company
- The place of registration of the company, namely England and Wales
- The number with which the company is registered at Companies House
- The address of the company’s registered office
- The names either of all the directors of the company, or of none of them, but not of only some of them
Normally, you would print the address of the principal place of business together with email address, telephone and fax numbers at the top of the paper. The last four items listed above traditionally appear in small print at the bottom of the paper, and it is useful also to include here the company’s VAT number (preceded by GB) so that the same stationery could be used for invoices as required.
All company emails and replies to emails are now considered to be headed paper and as such must include items 1–5 above. All company websites must include items 1–5 above, and, if registered for VAT, must also include the VAT number (preceded by GB).
Company bank account
As soon as the company has been incorporated, you will be able to open the company bank account, and we suggest that you approach the bank and obtain a company mandate form at an early stage. Some people prefer to use the bank that looks after their personal account whilst others like to keep business and personal banking separate; the choice is yours.
However, for the sake of speed and convenience we would recommend that you have access to digital (internet) banking, ideally using a major bank that offers the ‘Faster Payments’ service.
Next resource: Working through a limited company: Keeping accounts