Limited Company status could benefit your business. Other than the limited liability status afforded by the company, having a limited company number on your stationery also affects interested parties perception of your business. Limited companies are perceived as being larger and more serious about being in business. There are implications however, so speak to your accountant before you incorporate.
For a free one hour consultation on whether incorporation is something you should be considering, please call 0845 680 2502 and ask to speak to Joanne.
Incorporation : The process of incorporating a business is simple. There are many wizards available on the internet that take you through the process step by step for under £40. Once you have incorporated you will be given a limited company number. From now on, Companies House are going to expect you to give them regular information – even if you do not actually trade through this company.
Companies House Reporting: All limited companies must provide Companies House with details about their company on a regular basis. These pieces of information become public record and anyone can have access to them for £1 per document. This is a legal requirement that goes hand in hand with being a limited company. The penalties for non-compliance are high.
- Annual Return – this document is a declaration of shareholders, shareholding and registered office. You are required to complete an annual return every year on or around the anniversary of incorporation. There is a cost for submitting this document of £15 to file online or £30 for a paper copy.
- Accounts – for smaller companies, an abbreviated set of unaudited accounts can be submitted. This allows you to meet your legal obligation with Companies House without giving too much sensitive information away.
HMRC Tax Return: Limited Companies must provide a CT600 to HMRC and this must be produced with a full set of statutory accounts including notes. You can use the HMRC software to submit this return in full (commercial software is available), or you can attach a set of statutory accounts to the CT600, but this must be in XBRL format. Submissions in an incorrect format will be rejected and late submissions attract penalties.
Limited Companies are taxed under Corporation Tax rules. If you need any advice on Corporation Tax, please call 0845 680 2502
PAYE v Dividends: Once you are trading as a limited company business, you have two roles. You are a director/shareholder and an employee.
As an employee you will be on the payroll. You will be paid a salary for the work you do in the business (tax and NI will be deducted according to PAYE rules).
As a director/shareholder you could receive dividends (if your company is profitable and dividends are issued).
There are rules around how and when dividends can be paid out of a limited company, but the decisions you make about PAYE and dividend could help you keep more of the money you earn.
VAT: You are required to register for VAT if you have made taxable supplies over £73,000 in the last rolling 12 months or expect to go over £73,000 in the next 30 days. There are several different VAT schemes that you can choose. For help choosing the one which helps you keep more of the money you earn. Call 0845 680 2502
Note: the above is in no way a comprehensive list of all the things you would need to do on incorporation. For further details please phone 0845 680 2502