Setting up a limited company
Setting up a limited company isn’t actually that hard, it just takes a bit more organisation and money than being self-employed.
The cheapest method is to go directly to companies house (www.companieshouse.gov.uk) and pay them the £20 fee to setup your company.
You can request a company startup pack from them which will give you the relevant forms (two forms to fill in, fairly simple). However, you will need two more items to be truely legal.
You need to have what are called the Articles of Association.
This is a legal document that defines what your company will be doing. The reason for these are lost in the mists of time, essentially I think the reason is for limited companies with multiple directors, where there is division about what the company should do next, they can look at the articles of association to see if the plan is within the company scope.
Secondly you need a memorandum of association. You need this, not companies house, but it is supposed to be a legal requirement.
This document is essentially the minutes of the first ever directors meeting. It has to be laid out in a special way, and it says things like who is going to be your accountant, who the directors are and what they will be paid, and what banking you’ll do and so forth.
I searched for a while to find examples of these documents, and this is the thing that made me not form my company direct in the end. If you have a lawyer friend, they can draft these documents for you, but I wouldn’t advise writing them yourself as if they are wrong your company may not be legal.
In the end I found an online company formation agent, called Company Wizard (www.company-wizard.co.uk). Forming the company took me about 25 minutes of form filling, and I got the registration document the next day.
I purchased not only the registration but a bound portfolio for the register of members shares and other legal documents, and total cost was approx £70.
Now you’ve done that you will receive a registered company number for your company name. Thats it you are officially a director of a limited company. Now you need to tell the Tax office that you are employed as a director, and that you are a new employer as well.
You may also want to think about VAT Registration. As for me I haven’t registered for VAT yet, I’ll cover why later.