What is a Limited Company?
A limited company is a separate entity 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 are simplified. Reasons for wanting or
needing a limited company may include ownership
of property, obtaining outside finance,
taxation, status and protection from risk.
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.
What is the difference between a Limited
Company and a plc?
A PLC is a public limited company and a limited
company is a private limited company. Private
limited companies are much more common than
public limited companies.
A plc may be listed
on the Stock Exchange or the Unlisted Securities
Market but does not have to be.
limited company cannot be listed.
Before it can start to trade, a plc must have
at least £50,000 worth of shares issued and at
least 25% of the value must have been paid.
private limited company can have just one share
A plc must have at least two directors and a
A private limited company may have
just one director and a secretary.
What are the benefits of a Limited Company?
First and foremost, the principal benefit of
trading via a limited company has always been
the limited liability bestowed upon the
company's officers and shareholders. As a sole
trader or other non-limited business, personal
assets can be at risk in the event of a failure
of the business, but this is not the case for a
limited company. As long as the business is
operated legally and within the terms of the
Companies Act, directors' or shareholders'
personal assets are not at risk in the event of
a winding up or receivership.
Many of the
costs associated with managing and operating a
limited company are not much greater than with a
There is no obligation for a limited company
to commence trading within any set time period
after its incorporation. This means that the
formation of a limited company is one simple and
low cost method to protect a business name.
Whilst this does not in itself give any rights
to use of the business name, many clients form
companies in anticipation of future development
of new businesses or in order to protect the
limited company name of an existing non-limited
business for the future. No two limited
companies can exist with exactly the same name.
What responsibilities will I have towards
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; Annual returns (Form 363);
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 the other details.
How long does it take to form a company?
Our system uses the Electronic Filing facilities
at Companies House. Companies House aim to
respond to electronically filed documents within
4 working hours. Although this is not always
possible, it does generally mean that if you
placed an order before midday on a normal
working day we can have your company
incorporated by the end of that same day. Our
best turnaround time to date has been a company
formation completed in less than one hour.
Can I choose any name I want for my company?
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
- The use of certain words is restricted
- Names likely to cause offence are not
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
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 Companies
House notes CHN2, CHN3 & CHN11.
What is a Certificate of Incorporation?
This is the Official certificate that Companies
House issues when a company is incorporated. It
will include the date of incorporation, your
company name and registered number. We will
email this to you along with any other relevant
What are Memorandum and Articles of
These are the rules for running the company.
They show what the company can do by law, where
its registered office should be, how much share
capital can be issued etc. Unless you have
requested differently your memorandum and
articles will state that the company's
registered office will be in England or Wales
and your authorised share capital is £1,000 for
limited companies and £50,000 for PLC's. Your
bank will require a copy of your memorandum and
articles of association when you open an account
for the company.
On which documents must my company name be
The company must state its name, in legible
lettering, on the following:
- All the company's business letters
- All its notices and other official
- All bills of exchange, promissory notes,
endorsements, cheques and orders for money
or goods purporting to be signed by, or on
behalf of, the company
Where must my company name be displayed?
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
How many officers are required?
A private limited company must have at least one
director and one company secretary Formal
qualifications are not required, but unless
there are two directors, a person cannot be the
sole director and secretary.
A PLC company
must have at least two directors and the company
secretary must be qualified to hold the
Can anyone be a company director or secretary?
Anyone, of any nationality anywhere in the world
can be appointed director unless:
- They have been disqualified by court
- They are an un-discharged bankrupt
- They are a foreign national subject to
restrictions imposed by the UK Government.
Does a company have to have more than one
Since 14th July 1992 a private company limited
by shares can be registered as, or become, a
single member (shareholder) company. This means
that a single member now has no personal
liability for the debts of a company beyond
their share holding.
Do I need a company seal?
Changes to the Companies Act in 1989 mean that a
seal is no longer required and therefore our
basic and standard packages do not include a
Does Auxesia Accountancy provide First
Companies formed with Auxesia Accountancy are
formed with the correct offices and subscribers
(shareholders) from incorporation. This means
that there is no need for the commonly referred
to "First Meeting" to resign the nominee
officers. This also saves time when opening a
bank account as it will always be the correct
officer details displayed on a company search by
Does Auxesia Accountancy provide Share
Companies formed with Auxesia Accountancy are
formed with the correct share holders from
incorporation, so there is no need for initial
share transfer forms. Importantly, this also
means there is no need to pay stamp duty on the
transfer of any shares either. However, Form
88(2) is available for download from the
Companies House website, should you wish to
issue any further shares in your company after
What is my accounting reference date?
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
Can I change my accounting reference date?
You may change it by sending Form 225 (available
for download from companies House website) to
the Registrar. You must do this during the
accounting period affected by the change or
during the period allowed for delivering the
What are the authorised shares?
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
How do I issue more shares?
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
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.
What if I no longer need my company?
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.
What is a registered office?
The registered office is an address in England
or Wales (or Scotland if your company is
registered there) where documents can be
delivered to the company.
Companies House uses
the Post Office address file to verify
addresses; so, to avoid delays, please ensure
that your proposed registered office address is
recognised by the Post Office and always give
the correct postcode on forms sent for
Can I change my registered office?
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, as often as you need to.
Does Auxesia Accountancy offer a registered
Yes, we are able to offer this service at a cost
of £49.99 per annum. To take advantage of
these services just select the option presented
to you when placing your order (at the stage
where you enter the company name you wish to
Do I need to be VAT Registered?
If you wish to register for VAT, it is a simple
procedure. All you have to do is tick the option
when ordering your company and we will proceed
to register your company with the UK VAT office.
If this is on a voluntary basis, you must
provide proof of the company’s intention to
commence trading. In any case, the company must
register for VAT once its turnover reaches
In general if you are selling to the
public your prices will be lower if you do not
charge VAT. If you are selling to business the
VAT will not affect the cost to the business,
and you will be able to reclaim all your VATable
costs. (Most things apart from Rent, Rates and
What are the IR35 tax rules?
IR35 was first proposed in the 1999 Budget. The
purpose of the IR35 rules is to remove
opportunities for the avoidance of tax and Class
1 National Insurance Contributions (NICs) by the
use of intermediaries, such as service companies
or partnerships, in circumstances where an
individual worker would otherwise be an employee
or an office-holder of the client. IR35 is most
applicable to workers in the IT, telecoms,
engineering, oil, gas, offshore and
pharmaceutical industries and to interim
managers. However, the legislation is such that
any personal service company may be affected. If
engagements are deemed to be within IR35 then
the tax and NI burden increases by approximately