Forming a Ltd. company

movilogo

I did search on web about it but lots of things are confusing.

I am currently employed, but in near future I like to open a limited company (not sole proprietorship).

I understand that I can just open the company now and keep it dormant till I decide to trade.

Is it something I can do myself or need an account or a lawyer?

Mahmood_Reza

Unless a plc you can do this yourself. Even if dormant there will still be forms and documentation to complete for Companies House & the tax office. Ensure that a limited company is the rigth way for you, a lot of people are attracted by the idea of the limited company but it may not be the best way to trade from an accounting and tax view.
I am curious why you need one now - is it a particlar name that you want to "preserve"

movilogo

Well, that's one of the reasons.

Obviously I'm talking of Private Ltd company here and not public ltd company.

The reason I'm after a ltd company that a friend of mine will also be involved. We want to keep the option open for selling business to someone later or appointing more partners in business later.

Both of us are currently employed but want to start our own business soon. The reason I'm willing to do it now because for a long time it has become chicken-egg situation - whether to get business first and then form a company or the other way round.

As a result, we made no progress. Mind works much better when there's already a steady flow of cash (thru our jobs at present). So, I'm trying to prepare the ground (eg. company formation, business bank a/c etc.) so that we can actually start trading without delay.

Pennywise

Do you really appreciate the extra costs and admin hassle/bureucracy you have to endure by having a limited company? There are countless threads on this and other forums from people who were attracted by the simplicity of forming a company for just £25 or so online and then a year or two down the line get bombarded with fines, penalties and threats from Companies House and HMRC because of unfilled or incorrect returns and accounts and who can't afford an accountant to get them out of trouble. It's remarkably easy to rack up a few hundred or even thousands of pounds of HMRC and Co House fines if you're not 100% on top of the filing requirements.

Do you realise it's harder to get a ltd co bank account if any director has a less than ideal credit history? Do you realise that business insurance is likely to cost more for a ltd co? Do you realise the different rules on what expenses are allowable for tax between a sole trader/partnership and a limited company? I could go on, and on, and on.

I'd strongly recommend you go to see an accountant before you go any further - most will give a free initial consultation, so that you can discuss your plans and get the proper low-down on the pros and cons of a ltd company. I'm saying this as I'd hate to see a post from you in a year or two on this forum asking for help because it's all gone pear shaped.

paulwf

My advice if you do go down the Ltd route is to leave it until about a month before you intend to do anything with it. This is because if you want a High St business bank account most come with 18 months free banking and you don't want to waste it. Setting up the Ltd then setting up the bank account soon after will keep things simple.

As others suggest speak to an accountant first.

Mahmood_Reza

Please bear in mind that many businesses that are successfully sold on are sole traders, and partnerships (not companies). You need to consider a great number of issues (some previously mentioned - see above), for example, just to take one issue: if you make losses early and you have previously paid tax (as an individual) then from a tax planning point this is better - tax refunds may be generated.
Gain proper advice before making the decision.

Premier_2

movilogo wrote: »

...
Is it something I can do myself or need an account or a lawyer?

You can do it yourself, but it's probably cheaper and certainly easier to get an company formation agent to do it for you.

Do a search; expect to pay about £25 -£50 for an agent to form it and you won't have to bother learning how, let alone then doing it yourself.