Outline of how to buy a limited company.

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Outline of how to buy a limited company


Firstly it can be done directly with Companies House in Cardiff or Edinburgh by calling them and they will send you the forms to fill out. The advantage of this route is that it is relatively low cost, costing around £20. The main disadvantage is the paperwork involved and the danger that it might not be done properly if you aren’t familiar with what's involved. Although the paperwork is not difficult, it is time-consuming and requires a solicitor to witness some documents, I will go into more detail about the paperwork later on in the letter.

Secondly there are also companies which specialise in forming companies, called registration agents which you can find in the Yellow Pages, they will charge you anything between £50 and £150 so it’s a bit more expensive. The main advantage of this route is that such a company should ensure all necessary paperwork is handled and the company is properly set up, saving you time and hassle.

Finally plenty of accountants or lawyers will handle the formation for you. In many cases this will tend to be the most expensive route with many professionals charging anything from £100 to £250 for forming a company, although this should ensure your company is formed correctly.  Existing companies can be brought out by owning 51% of their shares and thus having controlling command of their affairs.  Limited companies shares can be brought on the stock market.

There is a substantial amount of paperwork involved in setting up a limited company.  For starters you will have to draw up a memorandum of association and articles of association which set out the background details of the company such as its name, how many members it can have, what the management structure will be, and so on.  These documents need to be drawn up for submission to the companies house to register as a limited company.  The other paperwork you will have to supply are the statutory registers and record books such as a register of members, directors and secretary and a register of charges.  Bear in mind all this information needs to be kept up to date on an ongoing basis, there is a lot of red tape associated with limited companies relative to sole traders.

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In order to set up a limited company you have to do the following:

Before you do anything you need to work out the true value of your company in order for you to divide it into shares, as shares are what limited companies are about.  This would be calculated by looking at how well your business performed in the past and how well it is expected to do in the future, this is normally done by a merchant bank and so you would need to appoint one. Once this information has been obtained you then need to decide ...

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