Last updated Apr 03, 2024 and written by Aditi Mohan

A Step-by-Step Guide to Forming a Limited Company.

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There are a few things you need to prepare before you form your limited company. Use our step-by-step guide to make sure you haven’t missed anything. 

1. Choose which type of company you need. 

There are a few different types of companies’ organisational structures. Before forming your company, you need to decide which type suits you best. 

Note: All limited company types function as separate legal entities to their owners/directors etc. Unlike a ‘sole trader’ who is personally liable for their business. 

The limited company formation types are: 

  • Limited by Shares 
  • Limited by Guarantee 
  • Limited Liability Partnership

How you set up as a business depends on what kind of work you do, and it affects how you get taxed and get funding. All of the above require registration with the company’s house but in terms of structure, they differ. 

Limited by shares

Most companies in the UK are limited by shares. Simply put, this company is owned by its shareholders who have certain governing rights. For example, directors can ask shareholders to vote and decide on changes to the company such as changing its ownership or business operations. Limited by share companies make profits, unlike a limited by guarantee company.

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Limited by guarantee 

Limited by guarantee companies are often non-profit organisations. Instead of having shareholders who profit from the company, LBG companies have one or more guarantors who put in a small investment to aid growth. 

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Limited Liability Partnership

A limited liability partnership is similar to a limited by shares company but has two or more directors. This is a popular option for law practices, accountancy firms or any business that is created by two or more people. 

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2. Choose your company name

Next, you must choose an appropriate company name. The name has to be unique- it can not be the same as an existing company or trademark and it must end in Ltd or Limited or LLP depending on your company type. There are a few more rules concerning offensive words or sensitive words such as United Kingdom or Accredited which can be misleading. 

Note: Remember your registered company name can be different to your trading name. 

Get a better understanding of the rules regarding your company name. Or use our tool to check if your company name is available.

3. Choose your director and a secretary. 

Every company must have a director, who is often the business owner and founder, but you do not need to nominate a secretary. 

Anyone can be a UK Company director provided you are over 16 and you have not been declared bankrupt or banned from being a company director by a court. 

4. Choose your shareholder or guarantor.

You need to have at least one shareholder or guarantor but this can be your director.  

4a. Choosing a Person of significant control (PSC) 

At this step you also want to identify a PSC, a PSC is a person(s) who: 

  • People who have 25% or more of the shares
  • People who have 25% or more of the voting rights
  • The right to appoint or remove the majority of board directors. 

As a UK company you must keep an active PSC register. Your company’s PSC is most likely you (if you are also the director), but you can have up to four. 

5. Prepare your documents 

Your documents, namely your ‘memorandum of association’ and your ‘articles of association’ (M&As) need to be prepared in order to show how you plan to run your company. These documents include details like your company name and outline the responsibilities of your directors. 

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6. Register your company

Finally, you’ll need to register an official address and choose a SIC code. This address will be on a public register, so you may want to consider using a registered office address service. Your SIC code identifies what your company does. 

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This may be the longest part of the process, which can result in mistakes. That’s where we step in. As experts in company formation we can ensure that your company will be set up and running in no time. Save yourself the time and let us file for you, leaving you time to focus on the more important aspects of your business. 

Find out how we can help you form a company today.