Setting up a limited (ltd) company in the UK is a popular choice for entrepreneurs and small business owners. It offers a range of benefits, including limited liability protection, tax efficiency, and a professional image. Here are the steps you need to take to start up a limited company in the UK:

Step 1: Choose a company name for your small business

The first step in setting up a limited company is to choose a name. The name must be unique and not already in use by another company. You can check the availability of a business name using the Companies House checker. You should also check that the name is not trademarked or being used by another business.

Step 2: Register your start up limited company

Once you have chosen a name, you need to register your company with Companies House. You can do this online or by post. You will need to provide the following information:

– Company name and registered address

– Details of the company directors and shareholders

– Details of the company secretary (if you have one)

– The company’s articles of association

You will also need to pay a registration fee, which is currently £12 if you register online or £40 if you register by post.

Step 3: Set up a business bank account

Once your company is registered, you will need to set up a business bank account. This will allow you to keep your personal and business finances separate. You will need to provide your company registration number and other details to open the account.

Step 4: Register your limited company start up for taxes

As a limited company, you will need to register for various taxes, including corporation tax, VAT (if your turnover is over £85,000), and PAYE (if you have employees). You can register for these taxes online or by post.

Register for Corporation Tax

All companies are required to pay Corporation Tax on any profits made. This starts with registering your business, which is usually done whilst registering on Companies House. You’ll need to keep good accounting records, and complete an annual tax return. You must pay your Corporation Tax, or report that none is owed, by your deadline. This is usually dictated by your company start up date, being nine months and one day after the end of your accounting period.

For example, if you began trading 1st July 2023, your accounting period would end 30th June 2024, making the deadline for submitting your Corporation Tax payment 1st April 2025.

The deadline for filing your Company Tax Return is typically twelve months after the end of your accounting period.

Register for PAYE

If you have employees, you will need to register for PAYE (Pay As You Earn) with HM Revenue & Customs (HMRC). This will allow you to deduct income tax and National Insurance contributions from your employees’ salaries.

Register for VAT

If your turnover is over £85,000, you will need to register for VAT (Value added tax). Despite seeming like just another tax bill, VAT can be claimed back on eligible business expenses, and all things considered, can mean a net gain overall.

Step 5: Set up a payroll system

Once you are registered for PAYE, you will need to set up a payroll system to manage your employees’ salaries and deductions. You can do this yourself or use a payroll service provider.

Step 6: Obtain any necessary licenses and permits

Depending on the nature of your business, you may need to obtain licenses and permits from local or national authorities. For example, if you are starting a restaurant, you will need to obtain a food hygiene certificate. Check with your local council or relevant authority to find out what licenses and permits you need.

Step 7: Set up your accounting system

As a limited company, you will need to keep accurate records of your financial transactions. You will need to keep records of all income and expenses, including receipts and invoices. There is software available either paid or free, depending on your business needs and size, to help you with your bookkeeping. Accountants sometimes offer bookkeeping services, so can take that all off your hands. You will usually find that using an accountant to process and file your taxes will save you money, make you more tax efficient and ensure you are fully compliant with all regulations.

Step 8: Create a business plan

A business plan is a roadmap for your small business, and is vital to the start up of your limited company. It outlines your goals, strategies, and financial projections. Accordingly, it is important to have a business plan in place to guide your decision-making and to show potential investors or lenders.

Step 9: Open a merchant account

If you plan to accept credit or debit card payments, you will need to open a merchant account. This will allow you to process card payments securely and efficiently. You can do this through your bank or a third-party payment provider.

Step 10: Set up your website and social media accounts

In today’s digital age, having a website and social media presence is essential for any business. Your website should be professional and easy to navigate, and your social media accounts should be active and engaging. As a result, you will be able to reach a wider audience and build your brand.

Step 11: Hire employees (if necessary)

If you need to hire employees, you will need to follow the relevant employment laws and regulations. This includes providing a written employment contract, paying the national minimum wage, and providing a safe working environment.

Step 12: Obtain insurance

As a limited company, you will need to obtain various types of insurance, including employers’ liability insurance (if you have employees), public liability insurance, and professional indemnity insurance (if you provide professional services).

Step 13: Review and update your business plan regularly

Your business plan should be a living document that you review and update regularly. This will help you to stay on track and adapt to changing circumstances.

A professional accountant can help you stay focused on your financial goals and advise on best practises. If you’re creating a small business in Essex or London, get in touch with Neil Smith Accountancy to see how they can help you.