Listed below are answers to
some of the most common questions we are asked. If a question
you need an answer to is not listed below please ask and we'll be happy to help.
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Limited Companies |
| Q. |
What is a Limited Company? |
A. |
A limited company is
a separate legal person created by incorporation at Companies
House. Its profits, losses, assets and liabilities are its
own. The company is owned by its members (the shareholders)
and run by the director (or directors) whose assets are protected
from loss if the business should fail. This is sometimes referred
to as limited liability. Because a company has a life of its
own the business can continue despite the resignation or death
of any directors or shareholders and the sale of the business
or the introduction of outside investors is simplified. Reasons
for wanting or needing a limited company may include ownership
of property, obtaining outside finance, taxation, status and
protection from risk.
A limited company is a separate legal entity
created by incorporation at Companies House. Once incorporated
Companies House issue a certificate and company registration
number. This becomes the company's ID so to speak. You can
change the company's name at any time but you still keep the
registered number. The profits, losses, assets and liabilities
belong to the company. The company is then owned by its members
(the shareholders) and run by the managing director directors.
This gives the directors Limited Liabilities. If the company
should fail the directors personal assets are protected. Because
a company has a life of its own the business can continue
to trade despite the resignation or death of any directors
or shareholders. Other reasons for choosing a Limited company
could include ownership of property, obtaining outside finance,
taxation, status and protection from risk. |
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| Q. |
Do I need to be a Limited
Liability Company? |
A. |
The reasons for incorporating
a limited liability company are varied, for example, it could
involve ownership of a property, obtaining investment funds,
taxation or contractual relationships. Many businesses function
satisfactorily as sole traders or partnerships however their
personal assets are at risk in the event of a failure.
The key point to recognise is that a company is a separate
entity. This means that it is a legal person in its own right.
It is separate from those who own or run it, and has 'limited
liability'. |
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| Q. |
What does Limited Liability
mean? |
A. |
Limited liability gives
the owners of the company (its shareholders/members) protection
should the company fail.
This means that if a company is put into liquidation, the
people who own the company will only be required to pay what
they have already paid or agreed to pay towards settling its
debts. |
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| Q. |
How to set up a Limited
Liability Company |
A. |
Simply let us check the
availability of your proposed company name using our free
name checking service, then decided if you need an "Off-the-Shelf"
company which can be transferred to you within hours. Or a
"Tailor Made" company with your choice of company
name or choose
a name from over 1000 of our suggested names. |
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| Q. |
Why Incorporate a UK Limited
Company? |
A. |
A registered company is a corporation ie.
a separate legal person distinct from shareholders. A Limited
Company separates business risk from the shareholders personal
assets whereas partners and sole traders remain liable personally
for all business debts.
The company is owned by its members (the
shareholders) and run by the director (or directors) whose
assets are protected from loss if the business should fail.
Because a company is a legal entity in its own right the business
can continue despite the resignation or death of any directors
or shareholders and the sale of the business or the introduction
of outside investors is simplified.
Advantages of Limited Liability Company:-
a) the debts and
contracts of the registered company are those of the
company and not those of the members, whereas in the
case of a partnership every partner is jointly and severally
liable with the other partners for all the firm's debts
and obligations incurred while he is a partner. |
b) A registered
company exists until it is wound up. It is not affected
by death, bankruptcy, mental disorder or retirement
of any of its members. |
c) The property
of a registered company belongs to and is vested in
the company. It is not affected by change of ownership
of shares in the company. In a partnership the property
belongs to the partners and is vested in them. This
means that there are changes of ownership of, and in
the formal title to, the firm's property from time to
time on the death or retirement of a partner or trustee.
In a company, transfer of shares does not affect the
title to the company assets. |
d) Subject to any
restrictions in the articles, shares in the company
may be transferred easily or mortgaged without the consent
of the other shareholders. |
e) Limited liability
for the shareholders . Liability in the case of a company
limited by shares is limited to the amount unpaid on
the shares held. |
f) Management of
the company can be separate from ownership and therefore
provides continuity after share holder changes. |
g) The taxation
of companies is often more 'flexible 'than other types
of organisations. A Limited Company is liable only for
tax on its profits, and this is payable by the Company
and not personally by the directors or shareholders.
The profits of a company are not therefore subject to
personal taxation higher rates. Directors pay tax on
their personal income. The Company is taxed on profits
after all expenses including directors remuneration
have been deducted. |
h) To enable you
to conduct business in the UK and/or in order that a
given business activity may fall under English law |
i) Capital, to
fund the company, may be obtained with relative ease
when compared to other business types. Floating charges
for example can be created over company assets but not
partnership assets and borrowing may be by way of debentures. |
j) Companies enable
tax planning, for directors holding shares, in the following
areas:
Offshore tax planning
Pensions
Retirement
Inheritance Provision
Government grants and business expansion schemes
Personal loans
UK tax shelters
Investment planning
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Company Names |
| Q. |
Can I choose any name I want for my company? |
A. |
Company
Name Checks
It is important to check that the name you
want is acceptable to Companies House.
Briefly, the
restrictions are that: |
You cannot register
the same name as another company; |
The use of certain
words is restricted; and |
Names likely
to cause offence are not allowed. |
It is also important to check whether your chosen name
is similar to any other names already on the register. If
your chosen name is too like another name, an objection
could be made within the 12 months following the incorporation
of your company and you could be directed by the Secretary
of State to change the company's name.
Certain words and phrases are classed as sensitive by the
Department of Trade and Industry. If this is the case you
will be prohibited from using them or you might have to
justify you are entitled to use the name. For more information
on this subject see our guide. |
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| Q. |
On which documents must my company name be shown? |
A. |
The company must state its name, in legible
lettering, on the following:
All the company's
business letters; |
All its notices
and other official publications; |
All bills of exchange,
promissory notes, endorsements, cheque's and orders
for money or goods purporting to be signed by, or on
behalf of, the company; |
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| Q. |
Where must my company name be displayed? |
A. |
Every company must paint
or fix its name on the outside of every office or place in
which its business is carried on - even if it is a director's
home. The name must be kept painted or fixed and it must be
both conspicuous and legible. |
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Incorporation and Procedure |
| Q. |
Why must I register? |
A. |
We provides more than
just a simple company formation service. We also provide you
with the facility to file 288a, 288b, 288c and 287 forms for
your company direct with Companies House.
You can also use our service to form as many companies as
you want and have them all allocated to your account with
this.
All these services mean that we need to be sure the right
person is making modifications to the right company, hence
the need to register. |
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| Q. |
What if Companies House reject my application? |
A. |
If Companies House reject
your application our system will automatically email you informing
you of this. You can then log back into our system and make
the necessary modification to your application and resubmit
your forms back to Companies House.
This must be done within 3 days as Companies House keep the
document ID process open for each failed application for 3
days only.
If you decide not to continue with the application after 3
days you must then log into our system and cancel the application.
Any costs associated with that application are placed on your
online account to use for any other services. If you wish
to have them refunded to your card please contact us. |
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| Q. |
What if I no longer need my company? |
A. |
Private companies that
have not traded or otherwise carried on business for at least
three months may apply to the Registrar to be struck off the
register. |
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| Q. |
What is included in your package? |
A. |
We offer two levels of
registration package, along with a number of other options
available at the end of the formation process. More information
on these can be found on our services page. However, both levels of service provide you with your
complete company formation, certificate and Memorandum and
Articles documents to start trading. |
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| Q. |
Can I use you to manage my existing
company? |
A. |
Yes, you can use our
system to manage any document services we have to offer whether
you formed your company with us or not.
First register online and when complete go to the Companies
House area of our website and complete the Document Authentication
process. Once Companies House receive your requested authentication
code (usually 5 working days) you can start using our service
to manage your existing companies. |
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Registered Office and other Services |
| Q. |
What is a Registered Office? |
A. |
It is the official address
of your company, which Companies House letters and reminders
will be sent. The Registered Office can be situated anywhere
in England and Wales (or Scotland if your company is incorporated
there). The Registered Office must always be an effective
address for delivering documents to the company, and therefore
Post Office Boxes are not allowed. If your company wishes
to change its Registered Office address after incorporation,
the new address must be notified to Companies House on form
287. |
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| Q. |
Can I change my registered office? |
A. |
If a company changes
its registered office address the new address must be notified
to Companies House on Form 287. This can be done online using
our website free of charge. |
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| Q. |
Do you offer a Registered Office service? |
A. |
Yes, we do currently
offer Registered
Office services. |
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Company Directors |
| Q. |
What is the minimum number of officers your
company requires? |
A. |
Every company must have formally appointed
company officers at all times. A private company must have
at least:
One director; |
One secretary |
Formal qualifications are not required.
A company's sole director cannot also be the company
secretary. |
A public company must have at least:
Two directors; |
One secretary -
formally qualified |
Formal qualifications are not required.
A company's sole director cannot also be the company
secretary. |
After incorporation, you must inform Companies House about:
The appointment
of a new officer - use form 288a; |
An officer's resignation
from the company - use form 288b; |
Changes in an officer's name or
address or any of the other details originally registered
on Form 10 - use form 288c. |
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| Q. |
Can anyone be a Company Director? |
A. |
In general terms, yes,
but there are some rules. You can't be a company director
if: you are an undischarged bankrupt or disqualified by a
court from holding a directorship, unless given leave to act
in respect of a particular company or companies;
There is no minimum age limit in the Companies Act for a director
to appointed in England or Wales however, he or she must be
able to consent to their own appointment.
In Scotland the Registrar will not register for any company
the appointment of a director under the age of 16 years old. |
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Shares and Shareholders |
| Q. |
What are the authorised shares? |
A. |
This is the number of
shares your initially authorise your company to issue to shareholders/subscribers.
Usually a share issue of 1000 with each share valued at £1
is used. It is worth noting that although you authorise 1000
shares, if only 1 share is issued to one person, that person
becomes 100% shareholder in the business. |
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| Q. |
How do I issue more shares? |
A. |
If you wish to issue
further shares up to the authorised share capital form 88(2)
should be completed and sent to the Registrar of Companies.
You can increase your authorised share capital by passing
an ordinary resolution at a general meeting. A copy of the
resolution and Form 123 detailing the proposed increase must
then reach Companies House within 15 days of being passed.
On a similar note, the authorised share capital of a company
can be reduced using Form 122 and must reach Companies House
within 1 month. |
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| Q. |
Share Transfer forms? |
A. |
We do have Form 88(2)
available for download from this website, should you wish
to issue any further shares in your company after incorporation. |
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Company Obligations and Filing Requirements |
| Q. |
What responsibilities will
I have towards Companies House? |
A. |
Every company director has a personal
responsibility to ensure that statutory documents are delivered
to the Registrar of Companies as and when required by the
Act. In particular:
Accounts (only
for limited companies); |
Annual returns
(Form 363); |
The appointment of a new director
or secretary - use Form 288a; |
The appointment of a new director
or secretary - use Form 288a; |
An officer's resignation from the
company - use Form 288b; |
Changes in an officer's name or
address or any of the other details originally registered
- use Form 287. |
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| Q. |
Why does Companies House need this
information? |
A. |
In exchange for the benefits
of trading with limited liability, companies must deliver
certain information about themselves to the registrar. He
must then make this information available for inspection by
the public so that they can make informed decisions about
companies that they may wish to invest in or do business with.
Remember, delivery of documents does not take place until
they reach the Registrar. |
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| Q. |
Do I need a Company Seal? |
A. |
Changes to the Companies
Act in 1989 mean that a seal is no longer required and therefore
our standard package does not include a company seal. |
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| Q. |
What is my accounting reference date? |
A. |
The accounting reference
date is the date in each year to which accounts will be drawn
up. The date depends on the date of incorporation as it is
the last day of the month in which the anniversary of incorporation
falls. For example, if your company is incorporated on 2 July
this year, the accounting reference date will be 31 July,
and its first financial year must end on 31 July next year
(or within seven days of that date). |
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| Q. |
Can I change my accounting reference
date? |
A. |
You may change it by
sending Form 225 (available for download from this website
under the Companies House menu option) to the Registrar. You
must do this during the accounting period affected by the
change or during the period allowed for delivering the associated
accounts. |
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| Q. |
Where can I obtain VAT information? |
A. |
The VAT office information
service. You can download the VAT Registration form. |
