©2019 by Ashgrove Accountants Ltd (Company Registration No: 08046804)

LIMITED COMPANY

Setting up a Ltd Company:

A Limited Company is a limited liability company whose creation and operation must follow specific rules. It is limited by shares or by guarantee, as it can be run as a private business; this means the company is legally separate from the people who run it and then has separate finances from your personal ones. This also means the company can keep the same profit even after paying tax.

In order to create a limited liability company, you must register with Companies House; there       is a form of incorporation available in the U.K. You will need to have:

  • A business name and address;

  • At least one director and at least one shareholder;

  • “A memorandum and articles of association”: an agreement to create the company and the rules in writing;

  • Names of people who have significant control over the company (people with more than 25% of the shares or voting rights)

Once you have these together, you can then register as a private limited company. 

 

Running a limited company:

As a director, an owner or one of the shareholders of a limited company, you must follow the company’s rules:

  • Shown in its articles of association, which is a legal statement signed by all initial shareholders is agreeing to form the company. It is written in this article all the rules about running the company agreed by the shareholders, directors and the company secretary.

  • Keep company records (records about the company itself and financial and accounting records) and report changes to Companies House.

  • File your accounts and your Company Tax Return with Companies House and your Company Tax Return with HM Revenue and Customs (HMRC).

If you have or want to run a private limited company, you may be able to file them together, that doesn’t need an auditor. You only need to have HMRC online account details company registration number along with the Companies House online account details.

  • Inform other shareholders if you might personally benefit from a transaction the company makes.

  • You must pay Corporation Tax on profits from doing business as limited company.

  •  Every year you should send a personal Self Assessment tax return after registering for Self Assessment.

 

Annual Accounts:

Your company’s annual accounts - called ‘statutory accounts’ - are prepared from the company’s financial records at the end of your company’s financial year.

You must include at your statutory accounts:

-A balance sheet: it includes the value of everything owned by your company.

-A profit and loss account: the sales of your company, running costs as well as the loss or profit it made for the period of its latest fiscal year.

-Report from a director

-Report from an auditor (based on your company size)

-The name and signature of director on the balance sheet

And you must send these accounts details to entities as shareholders, attendees of your general meetings as well as to HMRC (Along with your company Tax Return) and Companies House.

 

Corporation tax return:

If you have set up a limited company, even if you are not trading, you must file accounts at Companies House within nine months of your company’s year-end.

You don’t send a Company tax Return if you’re self-employed as a sole trader or in a partnership - but you must send a Self Assessment returns.

 

Mostly HM Revenue and Customs (HMRC) will send a ‘notice to deliver a Company Tax Return’ from as a reminder, but better your company or association file it previously.

Before to file your tax return to HM Revenue and Customs, you should work out your profit or loss for Corporation Tax (this is different from the profit or loss shown in your annual accounts). And all bills from Corporation Tax. As accountants, we can help you prepare the basic financial data and file all your accounts to HM Revenue and Customs as well as Companies House. You may be able to file your accounts with Companies House at the same time as your tax return.

You will have 12 months after the end of the accounting period as a deadline for your tax return. You will have to pay penalties if you don’t file your Company Tax Return by the deadline.

There is mostly a separate deadline to pay your Corporation Tax bill. It’s usually 9 months and one day after the end of the accounting period.

 

Confirmation statement:

 

All private limited companies registered in the United Kingdom must deliver at a confirmation statement to Companies House at least once every 12 months, even if the business is dormant. But you may choose to file more often.

The purpose of the confirmation statement (Companies House form) is to verify that important company data registered at Companies House and displayed on the public register is accurate and up to date.

Within 14 days after the end of confirmation date, if the statement is not filed; your company and its officers may be prosecuted. Your company may also be struck off the register. It might be a criminal offence if you simply don’t file it at all.

If any information is out of date, you must update your records before, or at the same time you file the statement.

You can file your statement online also. You’ll need your password and authentication code.

You must file a confirmation statement even if there haven’t been any changes to your company during the review period. This confirms the information we hold is up to date.

You’ll only need to pay the £13 fee with your first confirmation statement in any 12 month period; you will only be charged this fee once per year. If you choose to file more than one statement within 12 months, you don’t have to pay again. If you’re unable to file online, you can file a paper statement for £40 by post.

 

Closing a company:

If you have reached agreement with other directors and shareholders that the company should be closed, the way in which this is achieved or you close the company depends on whether the company is solvent or insolvent (bills payments).

The company can be closed by two ways with no debts ‘solvent’, either – getting it struck off the Register of Companies or – entering into a Members’ Voluntary Liquidation.

But if the company can’t pay its bill ‘insolvent’, you must use the creditors’ voluntary liquidation process. In other words, the interests of the people your company owes money to (its creditors) legally come before those of the directors or shareholders. When you liquidate a company, its assets are used to pay off its debts. Any money left goes to shareholders. You’ll need a validation order to access your company bank account.

Your company may be forced into compulsory liquidation if it can’t pay its debts. It can also be difficult to manage any company assets if that company doesn’t have a director; Companies House will eventually strike off. Shareholders must agree to appoint a director and may need to vote on it. Even so, the company still needs to pay corporation tax and file a tax return even if there’s no director.

 

Or, if you don’t want to close your company you can keep a limited company dormant for as long as you want. You don’t have to close your company if it’s no longer trading. You can let it become ‘dormant’ for tax as long as it’s not:

  • Carrying on business activity

  • Trading

  • Receiving income

 

Your company will still be registered at Companies House. You can keep a limited company dormant for as long as you want. But you must still send your annual accounts and confirmation statement (previously annual return) to Companies House.