A limited liability company is a popular choice when considering business models. It has relatively small costs to set up and get going. However, the essential requirements can appear daunting.
This guide outlines the key elements below and gives sources that are available for support.
Articles of Association
These are the building blocks of your company. They state how important functions will operate e.g. Directors’ powers. Model Articles are available on the Government’s website that cover all of the basic functions. However, they may not fit your particular requirements. Legal advice can help you adapt them or create bespoke Articles to truly fit your company.
Business Transfer Agreement
This is an important document which ensures that all of the relevant assets and liabilities of your existing business (if already established) transfer to the new company. It should outline what assets/liabilities are being transferred to the new company.
Any current employees prior to becoming a limited company are protected under Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) regulations. It is necessary to ensure that employee contracts and other agreements are transferred to the company.
Registering Your Company
You have to register your company with Companies House. There are various ways of doing this depending on what type of Articles of Association you use and it can be done in as little as 24 hours.
You will need to have certain information about your company when registering. The information will include: the company name, address, memorandum of association, articles of association, directors and shareholders.
After successful incorporation it is time to start thinking about how to keep your company in line with current legislation. You will need to keep certain registers of directors and shareholders, and disclose certain information to Companies House, HMRC and the public. If, before incorporating your business, you worked with any clients or suppliers you may need to discuss transferring their contracts over to the new company.
Things to Consider
What factors are important to you in setting up your company? What steps do you anticipate being the most difficult? Have you taken appropriate tax advice before deciding to set up your company? How many shareholders are there and do you have an appropriate shareholders’ agreement in place?
How TC Young Can Help
We can give you advice and assistance on all aspects of setting up a limited company to suit your specific requirements. In addition, our employment law team can help with any employee issues you have.