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Three legal structures are recognised for starting a business. An entrepreneur can start a business independently and become a sole trader, find a like-minded individual to team up with to form a partnership, or start a limited company.
There are five main types of limited company:
This is the most popular type of structure used to set up a limited company, with over one million private limited companies currently active. The liability of the shareholders is limited to any unpaid shares they own. Private limited companies are unable to sell their shares to the general public, but may have countless shareholders.
This type of limited company has guarantors rather than shareholders. The liability of the guarantors is limited.
This structure is used by large companies, who are free to trade on the stock market. Public limited companies must have a minimum of two directors, who make management decisions, and a qualified company secretary. In contrast to limited liability companies, public limited companies can sell their shares to the public to raise money. Public limited companies are only allowed to begin trading once they have been granted a trading certificate from Companies House. Such a certificate confirms the allocation of shares of at least £50,000 in value.
This company structure is rarely used. When it is, there is no limit to the liability of the shareholders.
This type of limited company structure is used by enterprises that wish to ensure that their assets benefit the community. Community interest companies can only begin trading once they have been granted approval from the Community Interest Company Regulator. The regulator monitors these companies to ensure that they are serving the community, as originally intended.
All limited companies must:
• Register with Companies House;
• File annual accounts with Companies House;
• Complete the annual confirmation statement to ensure that Companies House is supplied with up-to-date information about the company;
• Inform HMRC of profits and taxable income on an annual basis;
• Complete an annual corporation tax return and pay any liabilities within nine months of the company year-end;
• Ensure that their employees pay income tax and national insurance contributions on any income received.
In order for a business to set up a company using a limited liability structure, the business itself must register with Companies House, the regulatory body for the registration of limited companies. Entrepreneurs choose to use Coddan as their company formations agent.
While Companies Houses provides detailed guidance relating to the registration process, Coddan is able to reduce the time and effort associated with registering a limited company. Using the latest technology, we can register a new company within as little as six hours and can provide a registered address service to companies wishing to maintain separate registered office and trading addresses.