Step by Step

Nearly all newly formed companies in the UK are incorporated as Ltd and, if you are just starting up, this is likely to be your best bet. The term Ltd indicates that your company has a limited liability status, meaning that the directors of the company are not liable for the company’s debts, should it go bust. Another good reason for choosing this legal form is that it allows for relative flexibility in terms of capital ownership and management. Here are some basic points to give you an idea of what is required to set up as a limited company:

• First, there must be at least one shareholder. Should you decide that you want to be the only shareholder, you will need to form a so-called “single member private limited company”;
   
• There are no minimum capital requirements, but you will need to produce evidence of shares for at least £2 at the point of incorporation;
   
• There is no deadline for paying in of capital;
   
• You will need at least one director. This may be an individual or a corporate entity, such as a board of directors;
   
• You are also legally required to employ a company secretary. The secretary’s official task is to manage all of the administrative formalities, such as maintenance of records, calling of meetings, and so on;
   
• You will need to employ an external auditor to certify the annual accounts;
   
• An annual general meeting of shareholders must be held.