Setting up a company
Setting up a company
A step on the path to financial freedom
I setup Incygames Ltd, a UK company, which owns various apps, including Scarper and Nip To. This post explains why and how I did it.
Why setup a company?
I setup a company to:
Provide a home for the apps I was developing with others
Have a separate legal standing from me
Establish a way to share value with others
Be tax efficient.
I had experience as a company director and secretary so was somewhat familiar with the workings of companies.
There were various types of company I could setup, including: Limited (share based), Sole Trader (self-employed) and Partnership (shared benefits and responsibilities). The Limited company option met my needs and is characterised by:
Being legally separate from the people who run them
Having separate finances
Keeping any profits after tax
Having shares and shareholders.
You must own equity (a piece of a business) to gain your financial freedom. - Naval Ravikant
Choose a company name
A limited company needs a name which is sufficiently different from other registered company names and trademarks. The name usually ends Limited or Ltd. We can use the company name availability checker and trademark search to help. Aside from legal considerations, the name is a key part of the company’s brand identity and should relate to its activities. Previous posts covered the criteria and process for choosing great names. I chose Incygames Ltd because it is home for my game, Scarper, and Incy Wincy Spider was a lovable character from my childhood.
Setting up a limited company
To setup a UK limited company:
Choose a name - see previous section.
Identify at least one director and, optionally, a company secretary. Directors must:
Follow the company’s rules, shown in its Articles of Association
Tell other shareholders if they personally (the director) benefit from a company transaction
Pay Corporation Tax
Decide who the shareholders are and their share allocation. Shareholders have rights, e.g. they can vote to approve or reject a director’s request to make changes to the company. Most companies have ordinary shares and the holders get one vote and dividend payment per share. Specify the number of shares (of each type) plus shareholder names and addresses. Also, identify people with significant control (PSC), who control the company. There is at least one PSC, usually with a significant share holding, e.g. 25%.
Document how the company will run via:
Memorandum of Association: statement signed by the initial shareholders agreeing to form the company.
Articles of Association: rules for running the company, agreed by the shareholders, directors and the company secretary.
Register the company:
Register with Companies House plus for Corporation Tax.
Do both at the same time via the Register Your Company link, using information from steps 1 to 4.
Once completed, a Certificate of Incorporation is issued which confirms the company legally exists and shows the company’s registered number and date of formation.
Other resources
Setup a Limited Company by UK Government
Good Small Business Guide book by A & C Black
How to Join the New Rich post by Phil Martin
Trademarking post by Phil Martin
This post details the steps I followed to setup Incygames Ltd. Until next Sunday, I wish you well if you decide to setup your own company.
Have fun.
Phil…
