Many small businesses choose to set themselves up as a limited company. The big advantage of this method of trading is that your business liability is limited to the business, and you would not be required to pay debts out of your personal moneys, except in the case of fraud.
A limited company can have only one shareholder who could act as director and company secretary, and the company must be registered with the Companies Registration Office (CRO), Companies House, Crown Way, Maindy, Cardiff CF14 3UZ. Telephone their Contacts Centre on 0870 3333636 or visit their website www.companieshouse.gov.uk.
The Company’s stationery must show its name and address and place and number of registration. The fact that it is ‘limited’ must appear somewhere on the paper – either in the company name or as a separate statement. The stationery must also show the names (first name or initials plus surname) of either all the directors or none of them.
The accounts must be properly audited by a registered auditor within 10 months of the end of the company’s financial year and filed annually at the CRO, so that anyone, particularly shareholders who are not directors of the company, can inspect them if they wish. The accountant is usually appointed at the first Annual General Meeting and continues as auditor as long as both parties wish.
Very small companies may not have to file annual accounts because of the Totally Exempt Companies System. Ask your accountant’s advice.
You raise capital by selling shares in the company to the directors and others. The chair of the company, if one is appointed, is normally responsible to the shareholders.
The outline of the company’s trading purposes and methods is drawn up in the Memorandum and Articles of Association (often known as Mem and Arts). The Memorandum outlines the purpose of the company (its overall strategy) and the Articles of Association outline the way in which it will work -number of directors, voting rights and so on – (the company tactics). These documents need to be drawn up carefully; you should employ a solicitor.
You can buy a ready-made limited company ‘off-the-shelf from a company registration agent, with its Mem and Arts already prepared; virtually all you need to do is fill in the names of the director(s) and secretary and the company’s proposed address, and pay the appropriate fee. You need to be sure that any such business meets your own requirements. You can also learn about business registration in Singapore.
You can, of course, buy a business which already exists, including its goodwill, so that you can start trading straight away. In this case you need to look very carefully at its accounts, because they can be deceptive (without any intention to deceive). Employ an accountant for this; it is false economy not to do so.
Limited partnership
A limited partnership (LLP) combines the flexibility and status of a partnership with limited liability for its members. The Potential liability of a member is limited to the amount that the member has agreed to contribute to the partnership if the LLP goes into liquidation.
The LLP is required to submit annual accounts to Companies House, and if necessary have them audited by a qualified accountant, unless small business exemption applies; ask your accountant about this. Companies House must also be notified of any changes in partners and particulars, just as if the LLP were a limited company.
