When starting your business from home, it can be very difficult to find the time to properly research all of the options available to you, especially if you are juggling your start up with looking after the kids too. One of the main decisions you have to make that requires in-depth research is which legal or accounting structure you would like to use – you may consider setting up as a sole trader, or in a partnership. Your other option is to set up as a limited company.
A limited company can be identified by spotting companies with the abbreviation Ltd after its name, and differs from sole traders mainly due to the case of liability. Whereas a sole trader or partner may be held personally responsible for outstanding debts or other legal action, with a limited company you are not. Profits and losses belong to the company, and it can continue trading regardless of death or otherwise of shareholders or those who run the business.
As a result, running a limited company requires a huge amount of legal administration, so we have put together a quick step-by-step guide to help you get started on giving your company the Ltd suffix.
Register yourself or get help?
The first thing you have to decide is whether you are going to go it alone, or enlist the help of a separate firm to set up a limited company. While this will obviously not be a free service, it may be easier in the long run if you are starting the business in your spare home time. This will also avoid errors which could delay the process and eat even more into your valuable time with the kids.
Decide on the company officers
It is a legal obligation that all private companies have formally named directors at all times. Names and current addresses have to be kept up to date too. Private companies need to have at least one director, and may also need a secretary if the company’s articles of association stipulate so.
Pick a name
Picking a name for your new venture isn’t as simple as choosing the first thing that comes into your head. You need to ensure it is not offensive, and that it isn’t too similar to an existing business in the Index of Names kept by Companies House. If your business is web-based, it is also worth searching available domain names to ensure you can get the closest possible web address to your company name.
File the documents
As stated previously, business are usually registered online using a formation agent however, if you are going about it yourself, you will have to do it via the old-fashioned paper method. Whichever way you do it, once this step is completed, you are free to begin trading!