Limited Company

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This guide explains you how limited company is set and takes you through the processes of maintaining it.

 

 

 

 

Congratulations on forming your new Limited Company. There are a few key elements to be checked and considered carefully:

Registered office

This is the legal address of the company. You must remember that the company is a separate legal entity from those that own/manage it. Registered office address can be companies’ trading address or your accountants address. In most cases we advise our clients to avoid putting their home address.

Shareholders

The owners of limited company, they are entitled to a share of any distributions made from the company’s profit and to a share of any residual assets on winding up the company. A shareholder can be anybody from your business partner to a family member.

Directors

These are the people who are appointed by the shareholders to take care of the day to day running of the company. In a lot of cases, especially those of the small businesses the director is one of the shareholders. The director can have company’s secretary, who is another body of maintaining the company.

Bank Account

One of the first things to do after the company has been formed is to open a bank account. Business banking is needed in order to receive money from trading. There are other possible ways of tracking your companies income and expenses, however well organised business account makes it easier for both, your accountant and you.

There are numerous banks that are all keen to open an account for you.

Here is the list of what you need in order to open a business account in most of UK banks.

  • Contact details of the business
  • Business name and address, nature of business and legal status
  • Start date (if applicable), anticipated turnover and funding requirements
  • Incorporation details (if a Limited Company)
  • Personal name and address (of the directors/partners)
  • Date you moved into your home address
  • Previous address details (if at current address for less than three years)
  • Existing bank account details
  • Date, country and city of birth; and country of nationality and residence
  • Some photo ID – either a passport, driving licence or National Identity card (for the appointment)
  • Proof of your current home address – such as a recent utility bill, council tax bill or bank or credit card statement
  • Headed paper showing the details of your new business
Note: If for one reason or another you do not own Corporate Identity (logo, letterheads etc.) You may wish to request your accountancy firm to write you an official letter on behalf of your company.

Register for Taxes

There are three main taxes which you will need to ensure that the company is registered for.

PAYE

As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

VAT

Companies which earn more than 81 k per annum have to register for Value Added Tax. There are different rates of VAT, depending on the type of goods or services your business provides. You have to charge VAT (normally 20%) on top of the price you charge for your goods or services. Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year.

Corporation Tax

At the end of its financial year, your limited company must prepare full (‘statutory’) annual accounts. Corporate tax levied in the United Kingdom on the profits made by companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the European Union. This is paid annually depending on your companies profit and loss.

PAYE and VAT registrations can be completed online via HMRC’s website immediately. Shortly after incorporation HMRC will send a notice “Corporation Tax – New Company Details” which will contain a reference number needed to complete the registration for Corporation Tax. You may already be registered as self-assessment tax payer, if not then you will need to complete as SA1 form which can be downloaded from HMRC’s website. If all of this seems too much for you, the easiest way is to appoint your accountant to do company accounts and secretarial for you.

Business Insurance

There are several insurances for you, as a new company, to consider. There is no obligation to have one, but in unpredictable business world it is better to feel safe.

Public Liability
This is to insure business against injury, death or damage to third party property as a result of your actions.

Professional Indemnity
This is to insure the business against claims made against it by a client should they suffer a financial loss as a result of an error or negligence.

Employers Liability
This is to insure the business against claims made by an employee for injury or etc. This cover is not require if you are the only employee or own at least 50% of the shares.

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