When can one person set up a limited company? That is the question many people ask when they are considering starting their own business.
Limited companies can be set up by one person, but it can also be done with a group of people. Though it’s not unusual for someone to want to start their own limited company and have no experience in running a business, it can be a daunting task to set up a limited company on your own. There are many steps you’ll need to take and the process can be very complicated.
If you are considering setting up a limited company on your own, here are the key things you need to know.
Who can set up a limited company?
Anyone can set up a limited company in the UK, as long as they are:
- at least 16 years old
- not an undischarged bankrupt
- not a disqualified director
How can one person set up a limited company?
If you are considering setting up your own company, there is a lot to consider. You can start out with the basics and see how it goes, but if you want more than that, this will be something you need to take time researching so that you can make an informed decision.
There are many steps you’ll need to take and can be complicated if it’s your first time. Many people find that starting with a group of partners can make the process easier since they can share the responsibilities. It can also lead to a longer-term investment in terms of money, but it will save time down the line.
The benefits of setting up your own limited company
The benefits of setting up a limited company alone include owning your own business, being your own boss, and not working for someone else.
You can also enjoy more freedom in the day-to-day operations of the company. The end goal can be to make money or build up a legacy for your family.
The bad side can be that you can have high taxes and a lot of responsibilities on your plate. You’ll find that it can be hard to focus on one thing when you’re running everything.
How to register your business as a limited company
There are many steps that must be taken to register your business as a limited company, and it can seem complicated if this is your first time. It can take some research before you take any action for things such as incorporating your company or filing for a trademark or copyright.
You can start out with the basics and see how it goes, but if you want more than that, this will be something you need to take time researching so that you can make an informed decision.
Here are some of the steps:
- Establish your company’s identity with a company name, address and tax number. You can do this in person at Companies House or online through their website.
- Decide on what type of limited company you want to be registered as, either private limited company or public limited.
- Register your trade name and apply for an employer identification number through the HMRC website. You can also register at Companies House if you start up as a sole trader instead of registering with RWAs (registration with Her Majesty’s Revenue and Customs is mandatory).
- Make a decision about which type of small business insurance you’ll need.
- Decide on a budget for your business, especially if it’s going to be your own company instead of being part of a group.
- Get some professional advice from an accountant about setting up financial accounts and filling out tax returns. This can also depend on whether or not others in the group are also going to be responsible for these.
- Choose a limited company structure – can you afford the formalities of a public company or is it better as private?
- Register your new business at Companies House before registering for VAT if necessary.
Once your trade name has been registered, make sure that you keep up with all renewals and updates.
For more information about how to set up your limited company, use our comprehensive free guide to setting up a business.
Sole tradership or limited company?
For some sole business owners, choosing a sole trader can be less complicated and can offer lower taxes.
With this, you can save on both company taxes and your personal income tax rates. You can also avoid filing for corporation tax as well as self-assessed VAT returns. This can be ideal if you’re just starting out or need to run a small business on a smaller budget. Dependent on what the business is, they can often be cheaper to set up too. However, there are advantages and disadvantages to being a sole trader which you can read more about here.
Generally, anyone can start their own limited company as long as they are at least 16 years old or older, not an undischarged bankrupt, and not disqualified from acting as directors of UK companies.
There is a lot to consider when making a decision about whether or not to start your own company. This can include the basic steps and what you want out of it in terms of benefits, risks, as well as time commitment.
There can also be many pros and cons with starting up your own limited company so make sure you think carefully before committing to anything.
At MachFast, our app can help you set up your limited company in just a few clicks. No paperwork, and no fees. Find out more today.
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