Starting a Limited Company
Starting a Limited Company can be intimidating. This article helps you decide if a limited company is right for you.
A limited company is a company ‘limited by shares’ or ‘limited by guarantee’.
Limited by shares
Companies limited by shares are typically for profit companies where the company:
is a separate legal entity from the owners and operator’s
is financially separate from personal
has shares and shareholders
keeps profits it makes once tax is paid
Limited by guarantee
Companies limited by guarantee companies are normally ‘not for profit’. This means the company:
is a separate legal entity from the owners and operator’s
is financially separate from personal
has guarantors and a ‘guaranteed amount’
any profits are invested back into the company
If you are unsure if a limited company is right for you please see our guide Limited Company or Sole Trader?
Choose a name
Your company name cannot be the same as another registered company. The easiest way to confirm if your chosen name is available is to check the Companies House website.
There are other special rules that apply such as the ‘Same as’, ‘Too like’ and ‘Offensive’ rules.
‘Same as’ names: names where the only difference is punctuation, special characters, a word or character that’s similar in appearance or meaning, or a word or character used commonly in UK company names. E.g. ‘Hands UK Ltd’ and ‘Hand’s Ltd’ are the same as ‘Hands Ltd’.
‘Too like’ names: if someone complains to Companies House about your name being too similar to theirs you may have to change it.
‘Offensive’: a company name cannot be offensive.
Choose directors & company secretary
You must appoint a Director but are not required to appoint a Company Secretary.
More information on directors and company secretaries can be found here.
Decide who the shareholders & guarantors are
You need at least one shareholder or guarantor who can also be a director.
Follow this link for more information on shareholders & guarantors.
Identify people with significant control (PSC) over your company
Most PSCs are individuals who hold:
more than 25% of shares in the company
more than 25% of voting rights in the company
the right to appoint or remove the majority of the board of directors
Follow this link for more information on how to identify PSC’s.
Prepare documents on how your company will be run
You need to prepare:
a ‘memorandum of association’ - is signed by all initial shareholders/guarantors to agree to form the company. Companies registered online do not need to prepare a memorandum of association as it is created automatically for you on registration.
‘articles of association’ - are rules about running the company and are agreed by shareholders/guarantors, directors and company secretary.
Follow this link for Model articles of association.
Check what records you need to keep
See our article on record keeping for limited companies.
Register your company
You need to register an official company address and choose a Standard Industrial Classification (SIC) code.
Follow this link for a list of available SIC codes.
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