{"id":29214,"date":"2023-01-18T09:39:31","date_gmt":"2023-01-18T09:39:31","guid":{"rendered":"https:\/\/swoopfunding.com\/au\/?post_type=blog&#038;p=29214"},"modified":"2024-03-27T09:44:10","modified_gmt":"2024-03-27T09:44:10","slug":"how-to-set-up-a-limited-company","status":"publish","type":"blog","link":"https:\/\/swoopfunding.com\/au\/blog\/how-to-set-up-a-limited-company\/","title":{"rendered":"How to set up a limited company"},"content":{"rendered":"\r\n<p>New businesses usually fall into one of three categories &#8211; a sole trader, partnership or a limited company.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Which one is best for you will depend on how you run your company and how long it\u2019s been trading for. But if your company is expanding and you\u2019re looking to take on more staff, forming a limited company could make the most sense.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Here\u2019s our step-by-step guide on how to set up a limited company.\u00a0<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">Why set up a limited company?<\/h2>\r\n\r\n\r\n\r\n<p>There are a number of reasons why you might want to set up a limited company. For a start, your business will be its own legal entity with its own bank account. This means that as a company director, your personal and business finances will be separate and you can\u2019t lose more than the face value of your share in the business. In other words, you can\u2019t lose your personal assets if your business fails, as you could if you were a sole trader.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>A limited company can be set up by one person who will be the sole shareholder of the company, or it can be set up by several shareholders.\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">Is setting up a limited company right for your business?<\/h3>\r\n\r\n\r\n\r\n<p>If you started out as a sole trader and your business has now expanded and has a higher turnover, it could be worth forming a limited company. Rather than paying income tax on your earnings, as you do as a sole trader, being a limited company will mean you\u2019ll pay corporation tax on your profits. This could work out cheaper, particularly if you\u2019re a higher rate taxpayer. It also means that you will no longer be personally liable for business debts.<\/p>\r\n\r\n\r\n\r\n<p>Setting up a limited company can also make sense if you\u2019re looking for more ways to fund your business, such as private equity funding. Plus, it\u2019s a better option if you want to employ staff as you can pay salaries through the Pay as You Earn (PAYE) scheme.<\/p>\r\n\r\n\r\n\r\n<p>Finally, becoming a limited company can also make your business seem more professional and it can be easier to sell the business at a late date.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">Choosing a name for your limited company<\/h3>\r\n\r\n\r\n\r\n<p>Choosing a name for your limited company might be a bit of fun, but it can also be frustrating if you discover the name you want is already taken. Your company name must be unique and not too similar to an existing company. It must not be offensive and must not contain potentially misleading words that might imply you hold professional qualifications when you don\u2019t.<\/p>\r\n\r\n\r\n\r\n<p>Before making any decisions, it\u2019s worth carrying out a search on Google and checking <a href=\"https:\/\/connectonline.asic.gov.au\/RegistrySearch\/faces\/landing\/bn\/SearchBnRegisters.jspx?_adf.ctrl-state=msn6s4hk2_4\" target=\"_blank\" rel=\"noopener\">ASIC<\/a>\u00a0for a list of businesses with similar names. Remember that your company name must end in \u2018Limited\u2019 or \u2018Ltd\u2019. Note that you can trade using a different name to your registered name, but this must not include \u2018limited\u2019 or \u2018Ltd\u2019.\u00a0<\/p>\r\n\r\n\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">Key differences between a private and public limited company<\/h2>\r\n\r\n\r\n\r\n<p>Public limited companies are similar to private limited companies but there are some important differences, as outlined below:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li>A public limited company must have a minimum of $50,000 in share capital, but there is no such minimum for a private limited company.\u00a0<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<ul>\r\n<li>Public limited companies can sell shares on the stock market to raise money, but private limited companies cannot. Instead, they can only sell or transfer shares privately.\u00a0<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<ul>\r\n<li>Public limited companies must have at least two directors and a qualified secretary, while private limited companies require at least one person to act as a director. This person can also be the sole shareholder and there is no requirement for a company secretary.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<ul>\r\n<li>A public limited company must file accounts within six months of the accounting year, but this is nine months for private limited firms.\u00a0\u00a0<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p>Most freelancers, contractors and small businesses will set up as a private limited company.<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">What are the legal requirements for limited companies?<\/h2>\r\n\r\n\r\n\r\n<p>Although there are many benefits to setting up a limited company, there is much more administration involved and you are required to have at least one director to run the business.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Company directors are legally required to:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li>File an annual return with ASIC. This should include details of the directors, the registered office, share capital and shareholdings.<\/li>\r\n\r\n\r\n\r\n<li>File the company\u2019s annual accounts to ASIC.<\/li>\r\n\r\n\r\n\r\n<li>Submit your company\u2019s annual corporation tax return to HMRC.<\/li>\r\n\r\n\r\n\r\n<li>Ensure the company\u2019s corporation tax bill is paid \u2013 the deadline is usually nine months and one day after the end of the accounting period.<\/li>\r\n\r\n\r\n\r\n<li>Register the company for VAT if its VAT taxable turnover has exceeded $85,000 over the past 12 months.\u00a0<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">How do I set up a limited company?<\/h2>\r\n\r\n\r\n\r\n<p>Once you\u2019ve chosen your business name, you can register your new business as a limited company. It\u2019s relatively straightforward if you want to do this yourself, but you can also choose to pay an agent to register for you which can save time and help reduce mistakes.\u00a0<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">Register your own limited company<\/h3>\r\n\r\n\r\n\r\n<p>If you choose to register your own limited company with <a href=\"https:\/\/asic.gov.au\/\" target=\"_blank\" rel=\"noopener\">ASIC<\/a>, it costs $12 to submit your registration and you can pay by debit or credit card. Your company will usually be registered within 24 hours.\u00a0<\/p>\r\n\r\n\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">Use a company formation agent to register you<\/h3>\r\n\r\n\r\n\r\n<p>If you\u2019d prefer to use a company formation agent, there are several to choose from or you could use a solicitor instead.\u00a0It\u2019s also worth running a search of your chosen agent on Google to check customer reviews and ensure you\u2019re happy before contacting them.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Once you\u2019ve chosen a company formation agent, all the paperwork will be handled for you and the agent will also submit your documents to ASIC. Registering your company can take as little as three hours.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">How many limited company directors should you have?<\/h3>\r\n\r\n\r\n\r\n<p>You will need at least one company director to set up a private limited company. This is usually the person starting the business, but you can choose more than one if you prefer. If you\u2019re setting up as a public limited company, you\u2019ll need to have at least two directors. Company directors must be at least 16 years old. They do not have to live in Australia but the company must have an Australian registered office address.<\/p>\r\n\r\n\r\n\r\n<p>If you\u2019re setting up a public limited company, you\u2019ll also need a company secretary to maintain statutory registers and keep minutes of board meetings.\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">What documentation and evidence is needed to form a limited company?<\/h2>\r\n\r\n\r\n\r\n<p>There are certain registration documents that you will need to submit to ASIC before you can start trading. These include:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li><strong>A memorandum of association.<\/strong> This is a legal statement signed by all initial shareholders or guarantors agreeing to form the company. If you register your company online, you won\u2019t need write your own memorandum of association &#8211; it will be created automatically as part of your registration.<\/li>\r\n\r\n\r\n\r\n<li><strong>Articles of association.<\/strong> These are written rules about running your company agreed by the shareholders or guarantors, directors and the company secretary.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p>You will need to keep records of all significant details about your company, including its accounting records, for at least six years.\u00a0<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">How do I choose a registered office address?<\/h3>\r\n\r\n\r\n\r\n<p>When you register your business, you\u2019ll need to include the registered office address which is where all written communication must be sent.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>This address must be a physical address in Australia and in the same country your company is registered in. So if your company is registered in Scotland, it must have a registered office address in Scotland. You can use a PO Box but you must still include a physical address and postcode.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Bear in mind that your company address will be publicly available on the online register. If you don\u2019t want your address to be publicly available &#8211; if it\u2019s your home address, for example &#8211; you can choose to use a registered office address service which will cost around $50 per year.\u00a0<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\">What should I do after registering a limited company?<\/h3>\r\n\r\n\r\n\r\n<p>Once you\u2019ve registered your limited company with ASIC, you\u2019ll be sent a certificate of incorporation which will confirm that the company legally exists and shows the company number and date of formation. If you\u2019ve registered online, you can register for corporation tax at the same time. If not, you must do so within three months of starting to trade so that you can file your company tax return each year and pay corporation tax. If you don\u2019t do this in time, you could face a penalty.<br \/>At some point, you might also need to register for VAT \u2013 you must do this if your VAT taxable turnover has exceeded $85,000 over the past 12 months, but you can also choose to do it if your taxable turnover is less than this. Your taxable turnover is the total value of everything you sell that\u2019s not exempt from VAT. If you do register for VAT, you will also need to complete a VAT return each quarter.<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>New businesses usually fall into one of three categories &#8211; a sole trader, partnership or a limited company.\u00a0 Which one is best for you will depend on how you run your company and how long it\u2019s been trading for. But if your company is expanding and you\u2019re looking to take on more staff, forming a [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":29215,"comment_status":"closed","ping_status":"closed","template":"","category":[1368,1666,1667],"acf":[],"featured_image_urls":{"full":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled.jpg",2560,1707,false],"thumbnail":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-150x150.jpg",150,150,true],"medium":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-300x200.jpg",300,200,true],"medium_large":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-768x512.jpg",768,512,true],"large":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1024x683.jpg",1024,683,true],"1536x1536":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1536x1024.jpg",1536,1024,true],"2048x2048":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-2048x1366.jpg",2048,1366,true],"image_blog":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-408x252.jpg",408,252,true],"image_podcast":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-397x298.jpg",397,298,true],"image_banking":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-30x20.jpg",30,20,true],"image_blog_internal":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-840x480.jpg",840,480,true],"image_blog_medium":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1024x500.jpg",1024,500,true],"image_single_banking":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-80x53.jpg",80,53,true]},"post_excerpt_stackable":"<p>New businesses usually fall into one of three categories &#8211; a sole trader, partnership or a limited company.\u00a0 Which one is best for you will depend on how you run your company and how long it\u2019s been trading for. But if your company is expanding and you\u2019re looking to take on more staff, forming a limited company could make the most sense.\u00a0 Here\u2019s our step-by-step guide on how to set up a limited company.\u00a0 Why set up a limited company? There are a number of reasons why you might want to set up a limited company. For a start, your&hellip;<\/p>\n","category_list":"<a href=\"https:\/\/swoopfunding.com\/au\/category\/blog\/\" rel=\"category tag\">Blog<\/a>, <a href=\"https:\/\/swoopfunding.com\/au\/category\/sme-support\/\" rel=\"category tag\">SME support<\/a>, <a href=\"https:\/\/swoopfunding.com\/au\/category\/swoop-guides\/\" rel=\"category tag\">Swoop guides<\/a>","author_info":{"name":"Rachel Wait","url":"https:\/\/swoopfunding.com\/au\/author\/rachel-wait\/"},"comments_num":"0 comments","featured_image_urls_v2":{"full":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled.jpg",2560,1707,false],"thumbnail":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-150x150.jpg",150,150,true],"medium":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-300x200.jpg",300,200,true],"medium_large":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-768x512.jpg",768,512,true],"large":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1024x683.jpg",1024,683,true],"1536x1536":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1536x1024.jpg",1536,1024,true],"2048x2048":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-2048x1366.jpg",2048,1366,true],"image_blog":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-408x252.jpg",408,252,true],"image_podcast":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-397x298.jpg",397,298,true],"image_banking":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-30x20.jpg",30,20,true],"image_blog_internal":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-840x480.jpg",840,480,true],"image_blog_medium":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-1024x500.jpg",1024,500,true],"image_single_banking":["https:\/\/swoopfunding.com\/au\/wp-content\/uploads\/sites\/4\/2023\/08\/limited-company-featured-scaled-80x53.jpg",80,53,true]},"post_excerpt_stackable_v2":"<p>New businesses usually fall into one of three categories &#8211; a sole trader, partnership or a limited company.\u00a0 Which one is best for you will depend on how you run your company and how long it\u2019s been trading for. But if your company is expanding and you\u2019re looking to take on more staff, forming a limited company could make the most sense.\u00a0 Here\u2019s our step-by-step guide on how to set up a limited company.\u00a0 Why set up a limited company? There are a number of reasons why you might want to set up a limited company. For a start, your&hellip;<\/p>\n","category_list_v2":"<a href=\"https:\/\/swoopfunding.com\/au\/category\/blog\/\" rel=\"category tag\">Blog<\/a>, <a href=\"https:\/\/swoopfunding.com\/au\/category\/sme-support\/\" rel=\"category tag\">SME support<\/a>, <a href=\"https:\/\/swoopfunding.com\/au\/category\/swoop-guides\/\" rel=\"category tag\">Swoop guides<\/a>","author_info_v2":{"name":"Rachel Wait","url":"https:\/\/swoopfunding.com\/au\/author\/rachel-wait\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/blog\/29214"}],"collection":[{"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/blog"}],"about":[{"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/types\/blog"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/comments?post=29214"}],"version-history":[{"count":1,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/blog\/29214\/revisions"}],"predecessor-version":[{"id":34120,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/blog\/29214\/revisions\/34120"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/media\/29215"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/media?parent=29214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swoopfunding.com\/au\/wp-json\/wp\/v2\/category?post=29214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}