How To Set Up A Limited Company

Victoria Scally Advice and Tips, Limited Company, News

As business accountants, we’ve helped thousands of business owners make the leap to becoming limited company owners. If you’re planning on setting up a limited company , here are the key points you need to consider


Do you actually need to create a limited company?

There are many benefits to setting up your own ltd company, but it does have associated costs and involves more paperwork than, say, being a sole trader. If you’re not 100% convinced that going down the limited company route is right for you (or even what the differences are), start by reading this short article: “Should I become a limited company?

You can also sit back and let Dan explain it all in a YouTube video if you prefer – just click on the video link in the blog.


What is a Limited Company?

A UK private limited company is a separate ‘legal entity’. You may own it (as a shareholder), and/or be in charge of it (as a director), but the limited company is a separate legal ‘thing’.

Trading as a limited company is great from a protection point of view, as in general if the company finds itself in problems, your own assets (such as your house) are not at risk. (Outside of a few exceptions, we might add.)


Types of limited companies

Limited companies come in two types:

  • ‘limited by shares’


  • ‘limited by guarantee’

Both work in much the same way, keeping your personal finances separate from those of the business. The ‘limited by guarantee’ option is usually suitable for those setting up “not for profit” organisations. (See Govt site for more details.)


The importance of a separate entity

This ‘separate entity’ point is a key point to remember if you’re going from self-employment to starting your own ltd company. It’s important to bear in mind that the money the company receives is NOT your money, until you legally make it yours (usually via payroll or dividend).


Decision time

Before you rush headlong to register a UK limited company, there are some key decisions to make.

Decision #1: Choose your company name

This may sound simple, but it’s often a sticking point for many would-be business owners.

Check the words in your proposed company name

There are some restrictions on a business name, including NOT using:

    • Using ‘British’, ‘King’ or ‘Queen’
      • A name that is offensive or contain words that might be offensive
      • A name that is already registered
      • Names that are very similar to the name of an existing company

In addition, some names are not allowed at all, and some need special permission. There’s more information on what is and isn’t allowed on the Gov website – make sure you check all five lists!

Check with Companies House

At the Companies House website, you can search the names of all UK registered companies. Simply type in your proposed company name (click here)

and see if it already exists. If your name is too similar, you can be asked to change it.

Check existing trademarks

You should also check a trademark doesn’t already exist by typing your intended name into this Gov website.

Names that potentially infringe/include existing tradenames, copyright, or trademarks that you do not own are not allowed. We’ve seen companies that have been asked to change their name due to trademarking issues.

Also, big name brands have hit the headlines over their zealous protection of alleged breaches of copyright, as the court case over Boss Brewery (and comedian Joe Lycett’s change of name) illustrated:

Check the availability of your business domain name

You may also want to check that a website address (domain name) for your proposed business name is free to own. Although you can certainly trade under one name and have your company called something different, many owners like them to be similar. You can check out what domain names are available at most domain name sellers’ websites

There is also an argument for including the type of business you do in a website domain name even if it isn’t part of your actual company name. So, whilst your company may be called Geranium Canine Services Ltd, for example, your domain name might be more descriptive, such as

And if you plan to use social media for marketing, also check the availability of your business name on Facebook, Twitter, Instagram, YouTube., etc. Increasingly, small businesses (limited or otherwise) use just a Facebook Page for marketing with no associated website.


Decision #2: Choose where the company registered office will be

Your ‘registered office address’ is the address held at Companies House and is publicly available. For this reason, new business owners do not like to use their home address as the registered office.

This is not a problem as you can easily pay for the use of another physical address. Accountants regularly offer this service, and if they also do your accounts, this ensures they get all the company paperwork too! Remember, this address must be a physical place. You can use a PO Box, but it must still list a physical address with a postcode, which rather defeats the object!

Trading address and registered address

Your trading address can be (and often is) different from your registered office. For example, you wouldn’t necessarily want to list yourself on a Google business page with your registered office address, as this could cause issues with people trying to find you.


Decision #3: Who will own the company (shareholders).

Establishing who owns the company is key towards future tax savings. Basically, this boils down to who owns shares in the company.

IMPORTANT: Take professional advice on who gets shares and how many, so that potential future tax problems can be avoided later. If you get this wrong at the start, and subsequently need to move around shareholdings later on, you can run into these issues.

Share classes

Different share ‘classes’ can allow you to pay different amount of dividends to different people, which are useful tools for saving tax. You may have heard the term ‘alphabet’ shares – this is in reference to different classes of shares named A, B, C etc that could allow you to pay one amount to one shareholder, and a different amount to another. Again, always seek professional advice if you intend to do this, as this may not always be of benefit and the shares need to be ‘set up’ correctly to avoid tax issues.


Decision #4: Who will be legally responsible for the company (directors)

Choosing who will be the company directors is important as they will be responsible for the running of the company. You can be a director, or a shareholder, or both for your new limited company.

Being a company director is not just a box-ticking exercise. There are legal responsibilities to being a director and potential financial penalties for not doing your job well. So careful consideration should be given by anyone looking to become a director or wanting to appoint them. For clarity, you need to be aged 16+ years old to be a director.

There are also some practical tax planning benefits to being a director that are outside the scope of this blog. If you’re planning to become a director for a company that you do not own, make sure you understand the tax implications by talking to your accountant first.


Time to register your limited company

You have a couple of options here:

1. Form (create) your new limited company directly with Companies House


2. Via a formation agent such as an accountant, or similar online business.

The key difference between the two is that when forming a company with Companies House direct you will get set up in a standard way. This gives you standard ‘articles’ and ‘memorandum of association’ (which is totally fine), BUT you will not get some of the key legal bits of paperwork you are required to keep by law.

The key missing parts with Companies House formations are the company ‘registers’, which contain information about the directors and shareholders. These registers are sometimes used in a lending situation to prove ownership and details and should also be available if Companies House want to inspect them. You can read more at our article on Company registers: what you need to know.

When using a formation agent, you will often get these as part of the package, but do check first.

Speedy ltd setup

Limited company formation is normally very quick. Even when using an agent, you can expect between 24-48 hour turnaround.

Off the shelf ltd companies

You may have heard how people used to buy an ‘off the shelf’ pre-formed company to save money, but there’s no real benefit these days.


Let’s talk business bank accounts

Since your brand new shiny limited company is a separate legal entity, it will need to have a bank account in its own name.

In order to open a company bank account, you will need the company to be already formed. When you form a new company, you receive a ‘Certificate of Incorporation’ from Companies House to prove the company exists. The bank will need to see this.

When you apply to the bank, they may also ask for a ‘UTR’ or a tax reference (TIN). You normally receive this automatically a week or so after forming the limited company. Most banks will allow you to supply this later.


Want to learn a little more?

Check out our previous articles on:


Need help forming your dream limited company?

No problem! At Heelan Associates, we help form new companies every day, so please get in touch if you need any advice, assistance or just to ask us some questions.

Book a consultation and fire away with those questions. We offer a paid 1 hour, 1-2-1 consultation, and it’s a great way for you to get the help, when you need it.