3 Steps to Setting Up a Limited Company*

Working life is hard, isn’t it? Trying to find a job you love that you’ll happily work at for the rest of your life isn’t easy, especially in this day and age, and it’s even harder if you’re a parent and need to juggle childcare. That’s one reason I decided to go self employed, and although it isn’t easy, working for myself is probably one of the best decisions I ever made. I’m currently registered as a sole trader, this is the preference of most self employed people in the UK as it’s the most straight forward process. I don’t really have any business expenses aside from the running of the blog and my Internet connection. Doing my taxes can be a headache but it is relatively simple in comparison to say, a freelancer who had a lot of business expenses. If this is you, you might want to consider setting yourself up as a Limited Company.

As a sole trader you will be have complete responsibility and liability. If you dig yourself into a financial hole you’ll be responsible for getting yourself out again. If you’re set up as a Limited Company, or LTD, there will be a legal distinction between yourself and your company. Meaning, if it goes under, you won’t have to declare yourself bankrupt along with it.

Here are three steps to take when getting set up with your LTD.

Speak to an Accountant
Unlike when setting up as a sole trader, where you simply register with GOV.uk, it’s always best to speak to an accountant, before deciding to set up as Limited Company. It can be a straight forward process but there are extra responsibilities you might not have considered. By speaking to an accountant before, and during the process you can ensure everything is done correctly the first time so you don’t incur any extra changes. An accountant can also help you with setting up your incorporation platform and may even offer it as part of their LTD set up package.

Choose a Name
Who knew that no two Limited Companies can have the same name? Unlike when you set up as a sole trader and you can pick anything (within reason) your LTD company must have a unique name and it has to adhere to a certain criteria. It also might be worth checking the domain is available too as so much more advertising is done through the internet. You don’t want your LTD name to be Jack Sprat Cleaning Services LTD only to find jackspratcleaningservices.com has already been taken!

Appoint Your Directors
Your LTD needs at least one director. They need to be over 16 and they have to accept the responsibilities that go with the title. These can include registering for self assessment with HMRC, keeping the company records, filing the tax return and paying the taxes. They also need to help try and make the company a success and make decisions that will be a benefit to the company. If this is going to be you, you need to be aware there are penalties that could come your way should you fail these duties.

And that’s how you get started! Setting yourself up as a Limited Company may be the next step in your self employment journey, and although it brings more paperwork, it could be worth it in the long run.