How to register a limited company for under £30
How to Register as a Limited Company for under £30
If you want to register a limited company it can be an expensive process, with a number of hidden costs. It is possible to save money with a DIY approach. Here is a 6-step guide on how it works.
Guide in six steps
This guide is only for setting up a private company limited by shares – where members’ liability is limited to the amount unpaid on shares they hold (i.e. most production companies).
If you are interested in or are considering setting up as any other type of company, then check a guide such as the Lloyd’s TSB Small Business Guide, which you can often wangle for free if you say you’re interested in opening a business account with them.
This guide is not intended for legal use, check with a solicitor, accountant or Companies House if you are unsure about anything. We cannot be held liable for inaccurately filled out forms, misapplications or otherwise.
By following this guide you can find out how to register a company for under £30. Much cheaper than getting a solicitor to do it for you!
1) Check that the name of your company is available by ringing Companies House, or check online here. Decide upon company directors, registered offices and appoint a company secretary.
2) Download form IN01 from the Companies House website.
3) Fill in the form on your computer and print out. Get the company directors and secretary to sign form IN01.
4) Find your nearest legal stationery shop. A simple Google search should find one in your area. Buy a copy of Memorandums and Articles for company formation for about £6. Alternatively you can download a proforma Memorandum.
5) Fill in the Memorandums and Articles and get all directors and the company secretary to sign it with a witness (the witness can be anyone).
6) Submit the IN01 form, Memorandum and Articles to Companies House either by post or online. Postal filing costs £20, and usually takes 5-6 working days to process upon receipt. If you’re in a rush you can pay £50 for same-day incorporation. Online submission costs £15, or £30 for same-day incorporation. It is provided through a range of external providers, a list of these can be found here.
And that’s it.
Here it is again in a bit more detail.
1) Check you chosen name
Check your chosen name’s availability with the Companies House online WebCHeck. There are restrictions on what names can be used, if in doubt ask to receive the Companies House guide ‘Incorporation and Names’ which can be ordered through the website or by telephoning 0870 3333636.
Other Companies House guides worth getting include:
Life of a Company Parts 1 + 2 – GP2/GP3
Late Filing Penalties – GP5
Registrar’s Rules and Powers – GP6
There are responsibilities for both the directors and company secretary, so choose these roles carefully, as failing to keep Companies House up to date can leave you open to hefty fines or even imprisonment.
The work of the company secretary is more than it first appears, so I recommend getting hold of a book such as the Company Secretary’s Handbook (Helen Ashton, pub. Kogan Page, 1995, ISBN 0749426462, cc £12.99).
Choosing a registered office means you have to display a visible sign saying it is the registered office for the company, so if it is your residential address check with your landlord/lady first.
2) Download form IN01
You can download form IN01 from the Companies House website at www.companieshouse.gov.uk. You can also request the forms from them by telephoning 029 2038 0801.
Although a company may have just one director, that person cannot also be the secretary. The company secretary can also be a director if there is more than one director.
3) Fill in the form
By downloading the forms you can fill them in on your computer (they’re in Adobe Acrobat PDF format). Download the necessary translator from Adobe’s website (www.adobe.com) if your computer is too old to have it pre-installed. Get all the directors and secretary to sign the form, declaring any other directorships.
Filling in the form is relatively straightforward, but if you have problems or questions, phone Companies House on 029 2038 0018 for England and Wales, and 0131 535 8831 for companies registering in Scotland. For clarity, here’s a quick explanation of the more difficult section of the form:
Statement of Capital
This is the unpaid share capital that the directors agree to pay in the event of the company being wound up. It can be any figure, any number of shares, and value of shares as long as they are whole numbers and add up. Most solicitors recommend a capital of £10 or £100, although this figure does not divide into three equal parts, so if there are three company directors it is not ideal.
A figure such as £24 divided into 240 shares of £0.10 each, or £60 divided into 300 shares of £0.20 each would allow your share capital to be divided equally between 2, 3, 4, 5, 6, 8 or 10 directors. This sort of figure is also useful as it allows you to add or remove directors at a later date and redistribute their share capital.
Of course the amount of share capital taken by each director does not need to be the same.
On page 1 of the Articles of Association it usually states that the company capital is £x___ divided into x number of ordinary shares of £1 each. If your shares are other than £1 each, cross this figure out and and write beneath the actual value per share.
4) Get a Memorandum of Association
Memorandums and Articles of Association (which are two different documents, usually stapled together) are available from legal stationers, accountants, solicitors or company formation agents. You can get them cheaply from Oyez or you can download a proforma Memorandum from Companies House.
5) Fill in the Memorandums and Articles of Association
The Companies Act (2006) greatly simplified the Memorandum and Articles of Association. The Memorandum lists the names of the directors and secretary, and declares their intention to form a company.
The Articles are essentially a rulebook for the company, setting out directors’ responsibilities and how decisions are to be made. Companies can choose their own Articles of Association, or adopt common model Articles. Model Articles are available on the Companies House website.
Remember to add the company name to the front of both the Memorandum and the Articles, and at the top of the first page of both.
Each director must sign the end of the Articles and the Memorandum in front of someone. No stipulation is made as to who this should be, but a bank manager is a safe bet. There’s no reason why it couldn’t be your flatmate, though. As well as signing, each director should put their name and address. It might be worthwhile to add the address of the witness beneath their signature, although this is not obligatory.
6) Submit it!
Documents can be submitted online or by post. To submit by post, collate Form IN01, the Memorandums and Articles of Association, and your payment. It might also be wise to include a covering letter, with everything paper clipped to it, although this is not obligatory. Make the cheque payable to Companies House and the amount should either be the standard registration fee of £20, or the same-day service (if received before 3pm that day) of £50.
Mark the envelope ‘for the attention of New Companies Section’ and, if you are doing same-day registration, also write on the envelope ‘same-day incorporation’. It’s advisable to put your address on the back of the envelope.
If you wish to receive acknowledgement of receipt of the forms enclose a stamped addressed envelope, although Companies House will send your Certificate of Incorporation as soon as you’re registered anyway.
Send it to:
For Companies incorporated in Scotland:
The Registrar of Companies
37 Castle Terrace
For companies incorporated in England and Wales:
The Registrar of Companies
CARDIFF CF14 3UZ
Alternatively, online submission may be a cheaper and faster option. It costs £15, or £30 for same-day incorporation. Online submission is run through external providers. Be warned, however, that most of these providers offer packages to set up companies hassle free – you’ll get everything you need to start a business, plus a few extras, but the cost may be slightly higher, as the provider will charge its own fee on top of the Companies House fee. For example, one of the cheapest – efaze.com – offers a package including all the steps listed above, plus share certificates and draft board meeting minutes, for £14.95 plus Companies House fee, totalling £29.95. This is perhaps a good option for beginners, but no real saving for those able to complete the forms and post them.
Congratulations, you are now the director of a company.
The article was originally reproduced by kind permission of Nic Wistreich of Shooting People (http://shootingpeople.org/funding). It has been subsequently updated to deal with the change in business practices (last update – 21 January 2011)
How did you get on with the process? Please share your experiences below.