A Guide to Setting up a Private Company Limited by Shares
- Price: £3.60
- Published: June 2016
- Type: Business Information Factsheet
- Format: PDF
A private company limited by shares (usually known as a 'limited company'), has a separate legal identity to that of its owners, unlike a sole trader or a partnership where there is no distinction. A company can own property and other assets in its own right, as well as sue and be sued.
The formation and operation of a limited company is highly regulated under the Companies Act 2006 ('the Companies Act'). Private companies limited by shares must first be registered or incorporated with Companies House and then registered with HM Revenue & Customs (HMRC) for corporation tax before starting to trade. Limited companies are also subject to a variety of rules requiring them to report annually to both Companies House and HMRC.
This factsheet explains the ownership and management structure of limited companies, issues to be aware of when choosing a business name and company naming restrictions. It also explains the steps to incorporate and register a company, the process for buying an off-the-shelf company and registering for corporation tax. It briefly covers directors' responsibilities and specialist insurance cover for directors and officers.