Some of the key considerations when forming a limited company, such as the company name, directors and share capital, have already been discussed in Part One. Further important factors include:
Company addresses
When completing the company formation process you will be required to give addresses for the company and its shareholders and directors.
The residential address is required for all directors. This is the home address of the director concerned. The address is filed with the Registrar but is not available on the public record. Instead it is held on a private register only available to predetermined organisations.
The service address is also required for all directors and shareholders and is an address that can be used by the director or shareholder to receive information about the company from third parties. Also known as a correspondence address, it can be a residential address, registered office address or another address.
You might choose not to use your residential address as your service address when completing the company formation process as it is published on the Companies House website and is therefore available for public viewing.
The Registered Office address is the legal address of the company that is entered in the official register of the Registrar of Companies.
This address is also published on the Companies House website and must appear on all company stationery such as company letterheads, business cards and websites.
It is also possible to pay a fee to use another company’s address as the registered office, such as your accountant or lawyer.
Company documents
Once a company has been incorporated in the UK, you will be provided with electronic versions of your company’s Certificate of Incorporation, Memorandum and Articles of Association and Company Register. These are the basic formation documents.
However, you will need to consider whether you require additional documents such as share certificates and a Certificate of Good Standing.
Share certificates are legal documents that prove who the owners of the company are, how many shares they own, the value of the shares and the date they become a shareholder.
All private companies limited by shares should provide share certificates to shareholders within two months of issuing shares.
The Certificate of Good Standing proves that the company continues to exist, has no outstanding penalties, is up to date and is compliant with Companies House.
VAT registration
During the company formation process you might consider registering for VAT.
This is a tax charged on VAT taxable goods and services that are sold by VAT-registered companies to both business and non-business customers in the UK. It can also be charged on goods and services imported from other EU countries.
VAT registered companies generally add VAT to the sale price of most goods and services they provide. A benefit of registering for VAT when you set up a company is that you can generally reclaim the VAT you have paid on goods and services.
If you do choose to register for VAT when you set up a company you will have to complete a VAT return at regular intervals, usually on a quarterly basis
PAYE registration
When going through the company formation process you might consider whether you want to be registered for PAYE. PAYE stands for ‘Pay As You Earn’, it is HM Revenue & Customs’ system to collect Income Tax and National Insurance contributions from employees.
Income Tax and National Insurance are deducted from your employee’s salary based on their earnings. If the company is running a payroll it is usually necessary to be registered for PAYE. Employees can be exempt from PAYE, for example if they earn £111 or more a week.
However, if this is the case you still have to keep payroll records. If you have any further questions or queries about the company formation process email our company formations team at [email protected] or call us on 020 8951 6347.