Company Formation Checklist

In terms of cost, form filling and speed, setting up a new limited company has never been easier. However in the exciting rush to get going, it can be very easy to overlook crucial considerations, especially where you are likley to have other shareholders or external directors in the future, so it is worth thinking carefully before finalising your new company, to avoid morer hassle, cost and possibly litiigation in the future.

We hope the following non-standard and non-procedural brief company formation checklist below is useful. Please get in touch for additional practical advice.

• Consider  what to alter, if anything, in the Articles of Association and Memorandum of Incorporation, which are important internal documents constituting the company's internal rules, powers, roles and responsibilities
• Decide on initial shareholder structures and establish rules relating to transfer of shares and issue of new shares. Consider also tax implications on share structure
• As regards intellectual property, if you personally own intelelctual property rights which form a significant part of the business of the company, you need to decide whther to transfer those rights to the company, keep the seperate, possibly licence the rights to the company;
  
  If the company will use a property owned by a director you need to decide whether or not you should have a lease. There are many tax considerations attaching to this, so take advice before you act;
  
  Cars can be a major source of friction is small businesses. Take advice on whether cars should be owned by the company or kept out, how they are financed, insured and how you are going to meet travelling expenses;

Give thought to what the ‘corporate look’ is going to be. If you plan to use a trade name, do a search to make sure the company name AND trade name can be used without legal ramifications. Companies House produce a free guidance booklet on company names;

Your stationery, website and emails must show your registered number and other details. Adding your VAT number is usually a good idea (particularly if stationery will be used for invoices) so you will need to sort out these details before you can get your stationery printed. There is helpful information in the guidance issued by Companies House on company formation;

If your turnover is omore than the VAT limit you must register for VAT. You must also tell HM Revenue and Customs (HMRC) that the company is trading. Failure to do so within the time limit may lead to a fine. Even if you do not need an audit, you will probably have to appoint accountants to make sure your accounts comply with the Companies Act;

By law employers must have employers’ liability insurance. However, since 28 February 2005 very small companies which employ only their majority shareholder are exempt from the requirement to carry employers’ liability compulsory insurance. This has brought them into line with sole traders who do not employ anyone else;

Also, contact your local HMRC office for the employer's PAYE pack. The HMRC website has helpful leaflets;

Normally, you will not be able to open a corporate bank account until your bank has seen the company’s certificate of incorporation. If you need borrowing, consider what security can be offered and who will give guarantees if necessary;

Employees have numerous rights and it is important to know which laws apply to you and to be ready for forthcoming legislation. For example, all employees are entitled to a written statement of their terms of employment.

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