Ep02 - Setting Up Your Limited Company the Right Way

In the second episode, Nicola walks you through the practicalities of setting up your Limited company. From choosing a company name and share structure to registering with Companies House and HMRC, she shares the steps you need to take and the pitfalls to avoid. 

You’ll learn why opening a separate business bank account matters, how to decide on share classes, and why getting the paperwork right now saves headaches later. 

As an accountant who supports owner‑managed businesses every day, Nicola provides clear guidance and real‑world advice. If you’re ready to turn your business into a Limited company – or want to check you’ve done it correctly – this episode gives you a checklist of essentials.

What You’ll Learn:

• The key steps to set up a Limited company and register with Companies House and HMRC.
• How to structure shares, choose a name, and open a separate business bank account.
• Practical tips to avoid common formation mistakes.

Resources & Links:

I’ve written a book that expands on the topics in this podcast and comes with a companion guide. Learn more at www.thenumbersquarter.co.uk/book.

About the Podcast:

The Balanced Business – The Director’s Handbook is a 12‑part podcast series hosted by Bedford‑based Chartered Accountant Nicola Hageman. Designed for UK small business owners and company directors, the podcast explains how to run a Limited company with more clarity, confidence, and control. Each episode covers a practical topic – from choosing your business structure and staying compliant with HMRC to budgeting, VAT, systems, and delegating. The series is based on Nicola’s book and companion guide, available at www.thenumbersquarter.co.uk/book.

About Nicola and The Numbers Quarter:

Nicola Hageman is the founder of The Numbers Quarter, a friendly and approachable accountancy practice based in Bedford. She specialises in helping owner‑managed businesses grow their profits, plan for the future, and reduce stress. Nicola is known for her plain‑speaking advice and passion for aligning personal and business goals.

Connect with Nicola:

• Instagram – www.instagram.com/nicola_hageman
• LinkedIn – www.linkedin.com/in/nicolahageman
• Website – www.thenumbersquarter.co.uk

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Transcript

0:03

Welcome back to the Balance Business Podcast. I'm Nicola Hageman from the Numbers Quarter, and this is episode two of the Director's Handbook. In episode one, we talked about whether going limited is the right move for you, and if you've decided that it is, then first of all, brilliant, that's a big step and it's one that deserves to be done properly. Yes, you can technically set up a limited company in about 15 minutes on company's house website, but doing it right, doing it in a way that protects you, supports your growth, and sets you up for future success. While that takes a little bit more thought, so in this episode, I want to walk you through the steps of setting up your company in the right way. Not just ticking boxes, but understanding what those boxes mean. We will cover the essentials, the common mistakes to avoid, and how to build a foundation that works for you. So let's get into it. Okay, so before you register, let's think first, before you jump into company's house's website. It. Before you jump on the company's house website, it's worth slowing down for just a moment and thinking through a few key things. Why are you setting up a limited company? What are you trying to, what are you trying to achieve? Are you doing it for tax reasons, legal protection to win new clients or, and this is a really common one. Are you doing it because someone told you that you should now. I'm not here to talk you out of it, but forming a limited company is a legal step and you want to be clear on why you are doing it so that you can make decisions that line up with that reason. And once you've got your why sorted, the how becomes much easier. So let's start with the obvious. So let's start with the obvious. You'll need a name for your company. Now this sounds simple, but it's worth giving it a little bit more time because once your company is registered, that name is part of your brand. It's on your legal documents, your invoices, and if you ever decide to sell the company or bring on investments. And if you ever decide to sell the company or bring on investors, it's part of the value. So first, it needs to be unique. You can check this on company's house website, and I really recommend doing a few searches, not just to see if the exact name exists, but to make sure it's not too close to something else in your industry. You don't want people mixing you up with someone else or worse thinking that you are trying to ride on their coattails. Also think about your website domain, your email address, your social media handles. Are they all available? Because you don't want to secure the company name and then realize that someone else owns the.co.uk or the.com. And here's a little tip, and here's a little tip check for existing trademarks too. Even if the name is available on company's house, it could still be protected elsewhere. Okay, next up is your registered office address. This is where company's house and HMRC will send your official letters. And here's a bit that people don't realize. Next up is your registered office address. Now this is where company's house and HMRC will send you official letters. And here's a bit that a lot of people don't realize. It is published publicly, so if you put your home address here, it's going to be visible online to anyone who looks up your company. Now, that might be totally fine, or you might prefer to use a virtual office address or your accountant's address. Now that might be totally fine, or you might prefer to use a virtual office address or your accountant's address just to keep a bit of separation between you and your business. At the numbers quarter, we offer this service to our clients because it gives that extra layer of privacy, and honestly, it also cuts down on spam. Once your address is public, the junk mail starts flowing. Okay, let's appoint. Okay. Appointing directors and shareholders, every limited company needs at least one director and one shareholder. And yes, they can be the same person and in lot, and yes, they can be the same person and in a lot of small businesses, that's exactly how it works. And yes, they can be the same person. And in a lot of small businesses, that's exactly how it works. As a director, you are legally responsible for running the company. You are the one signing off on decisions, making sure the paperwork gets done, and representing the company in a legal sense. As a shareholder, you are the owner, the person entitled to profits and dividends, and if it's just you, this is straightforward. But if you're setting up with someone else, a co-founder, a business partner, or even a family member, then this is the point where you need to get really clear about how you're splitting things. 50 50 may sound fair, but it can lead to a deadlock. One person owning 51% and the other 49% gives you a decision maker. You might also want to think about bringing in different share classes. If one person is investing money but not working in the business, and even if it feels awkward, get it in writing, having clear roles, shareholdings and a written shareholders agreement can save you huge headaches down the line. So when you form your company, you are gonna be asked how many shares you want to issue and at what value. Most small businesses keep it simple. They issue one or a hundred ordinary shares at one pound each. This gives clear percentage split and makes dividend payments straightforward. The total amount you issue becomes your share capital, and it matters more than you might think. If you ever want to bring in investors or you plan to sell the company one day, your share structure will be part of the deal. Don't overthink it, but do take a moment to understand what it means, and if you're unsure, get some advice. It's much easier to get it right from the start, then try to unpick it later. Okay, let's choose a sick code. Now, this is one of those odd little admin things that no one really explains. So when you register your company, you're gonna be asked to choose a sick code, which stands for Standard Industrial Classification. It's basically a code that tells company how, it's basically a code that tells companies how, what your business does. Now, the list is, let's just say quirky. Um, it's a bit outdated, often doesn't match your modern businesses very well. So pick the closest match. Don't stress of it. Don't stress if it's not perfect. If you do a few different things, for example, coaching consultancy online courses, pick the one that describes your main activity. You can update this later if your business evolves, so don't get too hung up on it. Once your company is registered, your next move is to open a business bank account. This is essential. Your company is a separate legal entity and it needs to have its own bank account. Mixing business and personal money, even if you're a one person business, creates confusion, messy records and problems at tax time. There are loads of options now from tradition. There are loads of options now from traditional banks to online only providers like styling, Monzo or Tide. Choose one that fits your style and ideally one that integrates with your bookkeeping software. If you're using one, just don't skip this step. Just don't skip this step or try to run business through your personal account. It's not worth the hassle, and it's one of the quickest ways to lose financial control. Okay, and here's the bit. People often forget. Once you've set up your limited company, you still need to register for corporation tax. HMRC doesn't just magically know what you're up to within three months of starting to trade. And trade includes things like issuing invoices, signing contracts. You need to let HMRC know that the company is active and liable for corporation tax. Depending on your situation, you may also need to register for PAYE. So. Payroll. So if you're gonna pay yourself or anyone else's salary, VAT. So if your turnover is gonna exceed the VA threshold, which currently, uh, is 90,000 pounds as of VAT. So if your turnover is going to exceed the VAT threshold, which in, uh, June, 2025 is currently 90,000 pounds, or if you choose to register voluntarily. If in doubt, this is one of those areas where getting it wrong can mean penalties, but getting it right from the start is straightforward. So once your company is set up, the admin doesn't stop. You've got a few key documents and records that you need to keep on file, and these are known as your statutory books. They include things like your register of directors and shareholders. They include things like your register of directors and shareholders, any certificates that you've issued, and any resolutions or decisions made by the directors or shareholders. Now, if you're working with an accountant, they can help you manage these at the numbers quarter. We look after this for our clients so that you don't even have to worry about it. Now, if you're working with an accountant, they can help you manage these at the numbers quarter. We look after this for our clients so they don't have to worry about it. But even if someone else is helping you, it's your responsibility as a director to make sure everything is complete and accurate. Those records, these records might never be looked at or they might be crucial in the future, especially if you sell the company, raise investment, or go through an audit. Okay, last but not, okay. Last but definitely not least, think about how you're going to stay on top of everything. Now you've got a legal entity, you've got obligations, and you're building something that hopefully grows and evolves. So you'll need a system either in the form of software like Zero or free agent, or through working with an accountant who can handle the filings and give you guidance. In most cases, the best option is a combination of both. Use software for visibility and real time numbers and work with an accountant for strategic advice, deadlines, and peace of mind. And remember, your accountant should be someone that you can talk to, someone who explains things in a way that makes sense. That's the kind of relationship that I build with my clients, and it makes a huge difference. Okay, my final thoughts. Setting up a limited company isn't difficult, but it is important. Doing it properly from the start gives you more control, more confidence, and fewer nasty surprises later on. So take your time, ask questions, get advice where you need it, and know that you don't have to figure it all out on your own. This is your business, your journey, and how you set the foundations will shape everything that it comes after. Thank you for tuning into the Balanced Business Podcast. I am so glad to have you here. So if this episode has helped you feel clearer about setting up your company profit, if this episode has helped you feel clearer about setting up your company properly, I would love it if you follow or share the podcast with someone else who's starting out on the same path. In the next episode, we're going to talk about why it really. In the next episode, we're going to talk about what it really means to be a director, the legal responsibilities, the expectations, and how to stay on the right side of the rules. I'm Nicola Hageman from the Numbers Quarter, and I'll see you in the next episode.