As the name suggests a private limited company in its very nature is a business model which cannot publicly trade its shares – or be active on the stock market. This is because of the fact that all of the shares are privately owned, as the name suggests.

Because of the set-up of the business, it can be a lot easier for small businesses to operate this way, and there is no reason why such a company can just have one director if the shareholder feels that this is the right way to move forward.

There is a lot of paperwork associated with establishing a private limited company, however. When a PLC is registered with Companies House, a process which can be quite long-winded in itself, the accounts concerning the business’ activity need to be kept up-to-date and meticulously monitored.

The process of setting up a private limited company all starts with a registration fee which is sent off to Companies House, along with the corresponding forms which allow a record of the company’s existence to be made. Form 10, the first form which is required, aims to inform those concerned about the directors who are in control of the business. In addition, the registered address of the company is also needed. In order for the form to be recognised, each director needs to give a litany of information concerning previous employment and activity five years to their incumbent position.

Form 12 can be compared to the terms and conditions which are signed before you download a piece of software onto your computer, albeit incredibly more significant. This form needs to be signed by the solicitor who is representing the business, as well as all of those who are directly concerned with the business forming. Once this has been achieved, there is official documentation that the business is willing to comply with all of the legislation associated with running a company in the UK.

In addition to this, the Articles of Association need to be supplied. This concerns the shares which may be in a private limited company, and the processes which are involved with the transferral of shares amongst shareholders. It also outlines the criteria which might be associated with the different types of shares. There are further criteria which are outlined in this document that includes the rules of any board meetings which will take place once the private limited company has been formed.

The second document, the Memorandum of Association, is nowhere near as important now as it was before October 2009. It used to form part of the Constitution for a British company but this is not the case anymore.

Here, we have outlined the processes which are associated with setting up a private limited company. As difficult as it may seem, it can be incredibly worthwhile once everything has been done and the business you have established is running like clockwork. Altogether, it is one of the biggest steps your business can take.