Before you decide to form a limited company, it is important that you understand this legal entity. You need to know how a limited company is formed and what is required of you should you choose this type of business formation.
Private limited companies are the most common form of incorporations in the UK. When your company is incorporated, it becomes its own legal entity. This means that your company can contract with other parties and it can incur its own debt and liability. These liabilities are not the responsibilities of the owners, directors or shareholders which simply means that if the business fails, none of these people will be personally responsible for any debts that the business has incurred.
Note that there are different types of private limited companies. Private companies can be limited by shares or by guarantee. Companies that are limited by shares mean that the shareholders liabilities are capped at the specific amount that is unpaid on their shares. Limited by guarantee means that the liability of the shareholders is capped at whatever amount they have agreed that they will commit to the company.
You can form a limited company even if you do not currently reside in the UK. There are currently no restrictions on where the directors of a limited company reside or where they are originally from. It is only required that your company has a registered office that is located in the UK.
When you choose the form a limited company, you can do this in one of two ways. You can purchase what is called a shelf company from a formation agent or you can incorporate a new company that you build from scratch. Shelf companies are companies that are already existent and operating. If you choose this path you should put some consideration into choosing a company that matches your needs and your specific skill set. You can then change the name of the company and appoint a director or directors to run it. If you want to incorporate a new company, you can hire a company formation agent or go through Companies House yourself to register your new business.
Companies House is the governing agency for all UK businesses. You are required to register your limited company with Companies House and provide them with a list of your directors and shareholders as well as their addresses and other information.
Once you have chosen or opened a new company, you will need to give it a name. You cannot use a name that is already registered and the name of your company should give some clue as to what your company does. Note that you are not permitted to use offensive or suggestive language in your company name and your company name cannot mislead people into thinking that you do something that you do not do. You should also take care to choose a company name that does not infringe on the trademark of another company. When this is all done and you have chosen a name and your company has been registered with Companies House, you can begin trading as a limited company.
For more information about setting up a business visit Quality Company Formations