SETTING UP A COMPANY

SETTING UP A COMPANY

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Steps

1. Register your company

2. Company address

3. Appoint directors and company secretaries

4.>> Shares and shareholders<<

5.>> Memorandum and articles of association<<

6.>> Set up your company for Corporation Tax<<

Overview

All limited companies must be registered. To do this you need:

• a company name
• an address for the company
• at least one director
• at least one shareholder
• the agreement of all initial shareholders (‘subscribers’) to create the company - known as a ‘memorandum of association’
• details of the company’s shares and the rights attached to them - known as a ‘statement of capital’
• written rules about how the company is run - known as ‘articles of association’

Once the company is registered you’ll get a ‘Certificate of Incorporation’. This confirms the company legally exists and shows the company number and date of formation.

Types of private limited company

The liability for debts in a limited company is usually limited to the shareholders. Exactly what liability you have depends on the type of limited company you create.

·        Limited by shares

A private company limited by shares is owned by its members (called shareholders). Each member’s liable for the original value of the shares they were issued but didn’t pay for.

Example
A shareholder has 500 shares originally valued at £1 each. They have previously paid for 100 shares, i.e £100. At the time the company fails, they’re liable up to the original value of shares they haven’t paid for, i.e £400.

·        Limited by guarantee

A private company limited by guarantee means the members of the company financially back it up to an agreed amount.

Its members aren’t called shareholders.

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