Trading As a Limited Company

Trading As a Limited Company

If you decide that forming a private limited company is the best way to then you will first need to think of a name and this must a name that is not already being used you can check this out at Companies House https://www.gov.uk/set-up-limited-company. If the name is available, then the name must not include any of the following:

• Not already in use
• Using the word Royal will need further approval.
• The company name cannot be offensive.
• Your name also cannot contain a ‘sensitive’ word or expression or suggest a connection with government or local authorities.

Shareholders and Directors

You will also in the process have to register the directors including information like full name, address, date of birth.

You will need to register the shareholders, sometimes these will be the same as the directors especially for small startup businesses.

You will then need to issue the shares to the directors, and you will need a minimum of one director. The shareholding will be used to vote dividends from profit when the company decides to do this.

People with Significant Control

When setting up the shareholders you will also need to register them as a person with significant control if they own voting rights (Shares) of more than 25% of the total share capital of the company.

Bank Account

Now that the company is set up you will need to open a bank account, and this can be done in branch or online if using a challenger bank. There are documents that you will need to provide:

• Certificate of incorporation-this official conformation when the company was formed.
• Identification of directors and this could be passport and driving licence.

Once the company bank account is set up all sales and purchases invoice must nbe paid into the company bank account.

Confirmation Statement

On the anniversary of the company being set up at Companies House there will be a confirmation statement that must be submitted and is completed online and this confirming the company details, shareholders, shares, voting rights and people of significant.

Sometimes there are changes in directors during the year and more shares could be issued with new shareholder during the year.

Software

You will need to decide what way you are going to keep the company records that will be used for to form the financial statements that will be sent to HM revenue & Customs along with the company tax return form CT600 each year.

You will need to evaluate which one best suit your business needs and the way you operate and here are a few:

• Sage 50 Desktop
• Xero
• Kashflow
• Sage Business Cloud
• Quickbooks Online
• Clearbooks
• FreeAgent

Like most software a lot of these products are cloud based meaning an internet connection is all you need, no installing software of you server, computer, or laptop.

Corporation Tax

The company will need to submit financial statements to HM Revenue & Customs along with a CT600 form and this must be done for the year ned annually. The year end is the mend of the month after the company was incorporated (Set up). If it wishes the directors could choose to have a short first year say 11 Months and then this will be the financial year end going forwards.

Remember that the directors run the company on behalf of the shareholders even if they are the same directors as the shareholders which I common is small businesses.

Making Tax Digital

The year end for limited companies has no month that makes it easier for tax unlike sole traders and partnerships it is the fiscal year end that must be used of 31 March annually in line with the proposed introduction of Making Tax Digital fore companies, but no date has been set yet.