How do I set up a limited company?

[spudballoo]

I am being made redundant and one of the options I am exploring with various headhunters is interim management, or perhaps some kind of consultancy. For either I will need to set up a limited company, so that I am employed via a service company, and will have the relevant professional indemnity etc in place.

Does anyone have any experience of doing this? I will effectively be a sole trader, so I'm assuming nothing complex required but I know I need to have a company secretary. Are the various online services providing this a good, cost effective way to go? Or would I be better off spending some money for a company formation specialist or lawyer/accountant to help me, as I'm aslo absolutely clueless as to how to run a company!

Quite ironic given that I use to be in corporate finance and my husband owns and runs his own business....through a limited company. He's offered me his accountant to help me, but I think he's completely hopeless.....

Any experiences would be gratefully received.

Spud x

[ChasingSquirrels]

its really easy - we do it online for £29.95.
I am pretty certain that under the new companies act you don't need a company secretary.
Why do you think you need a company rather than just being self employed?

[spudballoo]

[dense icon] because the headhunters told me that's what their interim managers/consultants always do [/dense icon]

I feel so adrift in all this! I've worked for the same firm for 9 years, and have never worked for myself. The redundancy has been a bit of a shock and I'm floundering around a bit, can you tell?!

I've seen various companies offering £30 stuff, but I'm being such a ninny that I'm wondering if I shouldn't just pay up for someone to talk me through it.

I should be so so so much more switched on about all this than I am. I've been on extended maternity/sick leave for getting on for 3 years and it's showing....

Thanks for responding, x

[ChasingSquirrels]

i'll come back to this - I am planing cluedo atm (whith a 5yo - pity me!)

[spudballoo]

I totally pity you. Still...at least it's not Monopoly...or hide and seek with a 2 year old like I have to do All Day Long (to be sung to the Wheels on the Freakin' bus tun).

Thanks! x

[ChasingSquirrels]

I guess you might have IR35 issues, hence the company - work checking that out as you need to ensure contracts are watertight to avoid the tax liabilities.
DH is involved in this line of work, just asked him and he said normally the ones they use are ltd.

Setting up the company is v v easy. It is the ongoing admin, VAT, payroll (if needed), tax efficient renumeration extraction, etc etc that make it more complicated. Depending on where you are I would say you would be looking at £1-£2k pa for someone to do a decent job.
Set up of the company pay no more than £400 to set up and deal with all paperwork, including VAT and PAYE registration if needed. BUT this bit you could do youself relatively easily and save most of that £400 (+VAT).

[ChasingSquirrels]

you could get it cheaper (and pay much more) than that, I am thinking mid-tier local firm, but one man practitioners will be cheaper.

[spudballoo]

Thanks so much CS, thats really helpful and kind of confirmed where I'd got to having read about company set up. ie. the nuts of bolts of registration is something i could do myself, but the actual running of it is beyond me without some guidance. Yes there would be IR35 issues.

I will find someone to do it, and add the set up costs to my compensation figure for my redundancy (which is being done totally illegally, that's a whole other story! I have a lawyer handling that for me and we're working up a loss of earnings figure in terms of seeking compensation).

I really appreciate you helping me out, so did you win at Cluedo? x

[ShrinkingViolet]

I'm charging £3K pa to manage a friend's Ltd Co - but for that I'm Co Sec and a director, and deal with everythign financial including VAT. We paid £37.50 to set up the company.

[spudballoo]

I think I need to find someone like you SV as I am really Not Clever about such matters...! x

[ljhooray]

Hi there,
I used to work for Companies House and have set up 2 companies myself in the past couple of years. You can pay an agent but it really is so simple, I'd go for it and do it yourself. Go to their website (www.companieshouse.gov.uk) and download forms 10 and 12. The memorandum and Articles sounds more complicated than it actually is. I got mine from Oyez online, its the form CO1A. All you need to do is fill in your company name, address, the directors and secretary and how many shares you'll give yourselves. In your case, it's probably purely hypothetical (although your business could be so successful that you end up with rich yacht owning shareholders whilst relaxing on your own private island ! ) So most people allocate 100 shares and split these between whoever is involved in the company. The importance of shares in a small business like yours is likely to be dividends, so for example, if your company had 2 directors and when you made some profit and wanted to take that out of the company, is you had 50 shares each, you would divide the profit equally as 50/50 (top tip - get yourself a good accountant, best to get recommendations from friends on this one and they can explain all of that to you). Pretty sure you do need a company secretary still and you'll need at least one director.

If you are stuck at any point, the Companies House customer service line and very very helpful and although people will tell you it's tricky, it really isn't, you learn something about setting up a business and I think it gives you confidence and about managing your business going forward.

As for whether you should become limited in the first place, it really depends on the type of consultancy you wish to do and the type of clients you have. Many people will tell you if it's just you, then you could go sole trader, but in my epxerience, most clients want to see you are limited, gives them a sense of assurity and that you are a professional, successfully operating business. Gives more credibility than a one man band.

Hope this helps and don't feel like you're not clever enough, like most things its only a mystery because you haven't done it before. I'm pretty dense when it comes to the day to day running of a company but I've picked it up as I've gone along and found that by using help from Companies House, Inland Revenue and organisation like Business Link, I've picked most of it up. It's nice to know that you understand your own business, think it makes you more confident.

Good luck and let us all know if you get that private island

[spudballoo]

Thanks ljh, that's immensly helpful. I was thinking last night that whilst the easy thing to do is to pay someone else, really I ought to be able to get my head around the basics in terms of set up and, like you say, it will help me understand how a business runs longer term. I work in the legal industry, all my clients will be international law firms which I'm sure is why the headhunters are recommending ltd company.

As I will effectively practice as a sole trader I'm assuming there''s no reason why I couldn't be the sole director? I know I need a company secretary, who on earth do I pick to do that? !

I will scoot around the companies house site today. I read through a lot of stuff on the IR site last night and that helped .

thanks for all the hand holding! I am usually reasonably intelligent but I'm struggling with this for some reason. Fear, mostly, I suspect.

x

[ChasingSquirrels]

husband for co. sec.