Requirements as a Limited Company

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Private Limited Companies exist in their own right, meaning the company finances are separate from the personal finances of the business owners.

A company is usually limited by shares (your Accountant will help you decide the most beneficial legal structure of your business). This means the shareholders are not responsible for the company’s debt unless they’ve given guarantees to any loans but they may lose the money invested in the company if it fails.

A Limited Company has to be registered at Companies House as well as the HMRC. An annual submission of accounts, one in a slightly different format to the other, is required for each.

The company must have at least one director who may also be a shareholder. A director is regarded as an employee of the business and so required  to pay income tax and class 1 national insurance contributions on any earnings from the business.

A company director must also complete a self-assessment tax return each year, to declare any income resulting from the company paying out dividends on the shares.

Directors are personally responsible for submitting yearly accounts and the company’s annual return to Companies House. Your Accountant will normally do this on your behalf using the details supplied from your bookkeeping records.

A company has to pay Corporation Tax on its profits. The tax is due for payment before the Company Tax Return is due for filing, so an awareness of the amount due and careful cash flow management is required.

Corporation tax is due, in one lump sum, by 9 months and 1 day after the end of the accounting period (your business financial year). Your Company Tax return is due for submission by 12 months after the end of your accounting period. It makes sense for your Accountant to have completed your Company Tax return as soon after your accounting period as possible so that you’re prepared for the amount due. Your Accountant can only do this on receipt of completed bookkeeping records for the period as well as any other information required.

A VAT registered business is normally required to submit a VAT return quarterly. To be able to do this you need to record the net (without VAT) value of sales and purchases as well as the VAT part of the transactions in your accounting system.

Even if you are the only employee, register for PAYE with the HMRC. The company will then be required to keep records of the amounts paid to yourself and any other staff and the tax and NI deductions made on their behalf. Staff are usually paid weekly or monthly. Tax deductions and Employers National Insurance are paid over to the HMRC monthly and complete record of all salaries and deductions is sent to the HMRC monthly.

Find out more about registration and requirements for the HMRC at

Starting a company or organisation and corporation tax

Find out more about registering at Companies House and legal structures of a business

Business Link – Starting a private company

Summary

  1. Keep records of all sales and purchases including the VAT element if you’re VAT registered.
  2. Keep records of all salary payments and deductions if you’re an employer.
  3. Keep notes of when returns and payments are due to the HMRC and Companies House to avoid being fined.

Oct 27, 2014