Running a private limited company

Setting up a private limited company can suit all sizes of business and provides various advantages over operating as a sole trader or partnership. But it also generates more paperwork and official documentation, which is published at Companies House.

If you choose to set up a private limited company, registration with Companies House is essential and this includes choosing a name which hasn't already been taken. Putting in place a shareholders' agreement at the start can avoid potential future conflict. Directors will be responsible for running the company and have various legal duties, among them ensuring that an Annual Return is submitted every year, whether or not the company is trading. Statutory accounts will normally also need to be submitted to Companies House. Keeping board minutes can help to ensure the directors consider their duties when making decisions and are a legal requirement in their own right. If the company wants to appoint a non-executive director, a letter of appointment can lay out their terms, helping to smooth this relationship. Finally, if the company needs to lend or borrow money from another company for funding purposes, a professionally written loan agreement is extremely important.