UK : How to Set Up a Private Limited Company

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We hope our article about choosing the right business structure in the UK was useful. In this new article, we’ll give you all the information you’ll need if you decide to start your business as a private limited company.

There are two types of limited companies in the UK : private and public. Unlike a public limited company, a private one cannot sell shares to the public: this is why it’s a good choice if you’re just starting a business. 

Here, we’ll tell you everything you need to know about registering a private limited company : how and where to do it, and what information you’ll be asked to provide !

Setting up a private limited company

How to register a private limited company 

Registering is actually the easiest part of creating a private limited company. There are two options : registering online or by post.

You can register online provided that your company is limited by shares and uses standard articles of association, also known as ‘model articles’ – we’ll explain in greater depth later in this post. Keep in mind, you can’t register online if your company name doesn’t include the word ‘limited’.

Registering online costs £12 and you can pay by debit card, credit card or via a Paypal account.

The other option is to register by post. If you choose this option, you’ll have to fill in the IN01 form and send your application to the address written on it.

You must also pay £40 by cheque made out to ‘Companies House’. A postal application take 8 to 10 days but you can be registered on the same day you apply. If you want to do that, you must get your application to Companies House by 3pm and pay £100. Also, you must mark ‘same day service’ in the top left-hand corner of the envelope containing your application form.

As we said before, registering is the easiest part. What is going to give you a run for your money will be gathering all the information you’ll be asked to give Companies House during the registration process. Don’t worry, we’ll tell you all about it in the next section of this article.

What information do I need to register a private limited company

Your company’s name

Unlike a sole trader’s business, a private limited company must have a name. The name you choose must not be the same or too close to another limited company name.

The UK government identifies two specific cases : ‘same as’ names and ‘too alike’ names.

A ‘same as’ name is a name that only differs to an existing name by punctuation, special characters, similar word in appearance or meaning, word or character common in UK company names. The only way to register your company with a ‘same as’ name is if your company is a part of the same group as the company with the existing name or if you have written confirmation from the company with the existing name.

A ‘too alike’ name is slightly different. You can register your company with it, but you may have to change it if someone complains that it is too similar to his company’s name and the Companies House agrees.

There are also a few other rules : your company name cannot be offensive and can’t contain a word or expression that suggests a connection with government or local authorities if you didn’t get permission to use it. Check out what sensitive words or expressions require approval.

If you’d like, you can trade using a name other than your registered one. It’s the same system as the one used for sole traders. It’s called a ‘business name’ and must follow these rules :

  • Your name can’t contain any of the following terms : ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’
  • Your name must not be offensive
  • Your name can’t be the same as an existing trade mark. Here is a link where you can search for trademark. Be careful, you can use a name without registering it as a trademark, but if someone else decides to register the same name as a trademark, you will loose your permission to use it.

Here are some specific cases that you can check out on the UK government’s website

Your company’s address

This is the address where all official communications will be sent. It must be a physical address in the UK, and in the same country where you registered your company. This address will be publicly available on the online register.

You can use your home address, as well as the address of the person who will take care of your Corporation Tax (an accountant for example). You can also use a PO Box,  but you must include a physical address and postal code.

Your company’s directors

You can have several company directors if you’d like, but you only need one to register with the Companies House. The person you name as your company’s director must be over 16. He doesn’t have to live in the UK. As for the company’s address, the director’s name and address will be publicly available, but if the director uses his or her home address, he or she can ask Companies House to remove it.

A secretary is not mandatory for a private limited company but you can name one if you prefer. It can be the director, but not the company’s auditor or someone with an ‘undischarged bankruptcy’. Even with a secretary, it is the director who is responsible for the company.

Your company’s shares and shareholders

When registering your private limited company, you’ll be asked to make a ‘statement of capital’ by providing the following information pertaining to your shares :

  • the company’s ‘share capital’ : the number of shares the company has and their total value
  • the company’s ‘suscribers’ or ‘members’ names and addresses : a list of each of your shareholders
  • ‘prescribed particular’ : what rights each ‘class’ (or type of share) gives the shareholder.

There is no limit to the number of shareholders, but you must name at least one. The unit price of a share can be of any value.

Don’t take this part lightly : the way the company’s shares are divided and the rights attached to them are crucial for the future maintenance and health of your company. Be careful and take the time to establish a business and financial plan ! We have a free financial plan template you can download that is designed to make it easier for you to create your own.

Your company’s memorandum and articles of association

The last things your company needs before you can register are a ‘memorandum of association’ and ‘articles of association’.

The memorandum of association is a legal statement that must be signed by all the initials shareholders. It indicates that everyone agrees to form the company. You can download the official government’s template by following this link.

The articles of associations are the written rules for running the company. It has to be signed by the shareholders, the director or directors and the company secretary if there is one. It’s best to use model articles given by the government; if you don’t you won’t have authorization to register online !

The long list ends here. Once you’ve got all the information and documents sorted out, you can register your Company !

After you’ve registered your Company, you’ll have obligations as a company owner, including registering for Corporation tax within 3 months… but don’t worry, we’ll tell you everything you need to know about it in our next article : ‘What are my obligations as the director of a private limited company?’

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