Private Limited Companies in the United Kingdom
The UK Private Limited company is a business structure that is limited by shares and therefore cannot be publicly traded. They differ from sole proprietor businesses in the sense that limited companies are separate entities meaning the company and its owners are separate in before the eye of the law. This is also called limited liability which means that the debts of the company are limited to the share capital contributed should the company run into some trouble or simply fail.
All private limited companies in the UK must be registered with the Companies House (the registrar of companies). The companies may be limited by shares or guarantee. A company limited by shares means that it is a profit making venture owned by shareholders while one limited by guarantee implies that it is a non-profit organization owned by guarantors.
Incorporation of a Private Limited Company in the UK
To incorporate a private limited company in the UK, the following documentation must be forwarded to the Company house together with a registration fee of £40; application form, articles of association and a memorandum of association. The application form must include details of the directors (names, address, date of birth and occupation) and the address of the registered office. The articles of association govern how the company is run internally. A memorandum of association will state the company name, the registered office and company objectives with the name and signature of shareholders with the respective share allocations.
Requirements of a Private Limited Company
The companies Act of 2006 requires that all private limited companies at all times must have a company director. A company secretary is no longer mandatory, but rather discretionary. Company officers are appointed in the company’s articles of association. A private limited company might have several directors in which case one must be an individual.
Below are the prerequisites that must be met before the formation of a private limited company
Limited company names
A proposed name for the private limited company should always be provided and this should always end with the word ‘Limited’ or ‘Ltd’. Once provided, a search is performed to establish whether the proposed name is already exisiting. If by any chance the name is taken, then one will be forced to change. However, the authority may refuse to register a company name if it is offensive, includes a sensitive word of expression, includes banned characters, symbols or signs, implies a connection with public authorities, central or local government or the name ending is deliberately confusing or misleading.
At least one share must be issued while forming a private limited company. However, the company may be created with any number of shares of whatever value.
The accounting period for a private limited company in the UK starts on the day of incorporation. Note also that the financial statements must be filed 9 months after the lapse of the first financial year.
Every private limited company in the UK must have a registered office. This does not necessarily have to be the business address but it could be the address of the company’s accountant or lawyer where all notices and government communications are sent.
Taxation laws applied
Private limited companies in the UK must fill and submit their annual returns to the Companies House. A corporation tax is charged on all the profits generated in any given financial year. The tax rate depends on how much profit a company makes and is charged from a minimum of 20% upwards. The tax must be paid 9 months and a day after the lapse of its year. The company must also file the corporation return form that details how the tax was worked out. If the turnover is greater than £79,000 in a given financial year, the company must register for value added tax.