Limited Companies

Registration of Limited Company

Limited companies are among the two most popular types of company chosen by UK business people, with the sole trader route the other main avenue. All limited companies must be registered (‘incorporated’) with Companies House. To do this you need:

  • A company name - there are rules on what it can and can’t include
  • An address for the company
  • At least one director
  • At least one shareholder
  • The agreement of all initial shareholders subscribers to create the company - known as a ‘memorandum of association'
  • Details of the company’s shares and the rights attached to them - known as a ‘statement of capital’
  • Written rules about how the company is run - known as ‘articles of association’

Once the company is registered you will get a ‘Certificate of Incorporation’. This confirms the company legally exists and shows the company number and date of formation.

Pros/Cons

Pros

Credibility - Some clients will view a Limited Company in a more positive light.


Higher take-home pay - Because of tax efficiency you will take home more pay than other options


Lower personal financial risk - Because of its structure and separation between you and the company, you are protected from the threat of personal financial losses if things go wrong.


Tax planning - Various tax planning opportunities exist which can be tailored to your circumstances where applicable, to deliver significant tax savings.

Cons

Administration - There are greater statutory obligations, such as submission of Annual Accounts, Corporation Tax Returns and VAT Returns.


Costs - Because of the range of statutory obligations, there are usually higher accountancy costs if you don't get things right, higher financial penalties.


Directorship - Directors of limited companies hold obligations under the Companies Act 2006.


IR35 - You must show that you are genuinely self-employed and not just a disguised employee. This will typically require an IR35-friendly contract with working practices to match.

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Corporation Tax

Corporation tax is a tax imposed on the net income of the company. Every limited company must pay and keep records for Corporation Tax on its taxable profits. The Corporation Tax must be set up within 3 months of the start of the company’s accounting period. You may get a penalty if you don’t. At the end of a financial year, every limited company must prepare full (‘statutory’) annual accounts.

Action Deadline
File annual accounts with Companies House 9 mth. after your company’s financial year ends
Pay Corporation Tax 9 mth. 1 day after your company’s financial year ends
File a Company Tax Return 12 mth. after your company’s financial year ends

ABS Service Ltd can help you with:

  • Company Tax Return
  • Defining your Company Income

The Corporation Tax rate for company profits from 1 April 2015 is 20%

You don’t get a bill for Corporation Tax - it’s up to you to work out how much your company owes. You report Corporation Tax after you pay it, by filing a Company Tax Return.

Corporation Tax also applies to:

  • most unincorporated associations, eg clubs and co-operatives
  • foreign companies with a UK branch or office

Your company must keep records for Corporation Tax.

Profits you pay Corporation Tax on Taxable profits include the money your company makes from:

  • doing business (‘trading profits’)
  • investments
  • selling assets for more than they cost (‘chargeable gains’)

If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad. If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities. If you have nothing to pay you still have to tell HMRC that no payment is due - you must do this by your deadline for paying. You must still file your Company Tax Return. Allowances and reliefs.

You can deduct the costs of running your business from your profits before tax when you prepare your company’s accounts. Anything you or your employees get personal use from must be treated as a benefit. Some expenses aren’t allowed for Corporation Tax, eg entertaining clients - add these back to your profits when you prepare your Company Tax Return.

Capital allowances

Claim capital allowances if you buy assets that you keep to use in your business, eg:

  • equipment
  • machinery
  • business vehicles, eg cars, vans, lorries

 


Annual Return £40.00

The return an investment provides over a period of time, expressed as a time-weighted annual percentage. Sources of returns can include dividends, returns of capital and capital appreciation. The rate of annual return is measured against the initial amount of the investment and represents a geometric mean rather than a simple arithmetic mean.

Annual return is the de facto method for comparing the performance of investments with liquidity, which includes stocks, bonds, funds, commodities and some types of derivatives. Different asset classes are considered to have different strata of annual returns.

An annual return is a snapshot of general information about a company's directors, secretary (where one has been appointed), registered office address, shareholders and share capital. Every company must file an Annual Return to Companies House at least once every 12 months. The window for filing the Return must be within 28 days after the anniversary of incorporation or of the made-up date of the last Annual Return.

The following information is captured on an Annual Return form:

 

  • Company Name
  • Company registration number
  • Company type (private, public, etc.)
  • Company registered address
  • Principal business activities
  • Company Secretary details (if you have one)
  • Company director details
  • The ‘made-up date’ (the date to which the return is made up)
  • Details on the issued share capital
  • Shareholder details
  • Whether or not the company has traded during the past year

Details of share capital and shareholdings If your company has shareholders, you must provide a statement of capital with your Annual Return. This statement discloses the number of shares in existence, the nominal value of the shares, the amount paid up or unpaid on each share, and the characteristics of each class of share in issue. Companies House imposes no penalties for filing late annual returns but the longer you leave it, the more serious the situation could become. It is a criminal offence if you simply fail to deliver an annual return at all – your company could be prosecuted, a director could be held personally liable and removed from office and, in severe cases, your company could be struck off the register.

 

 


 

Closing a Limited Company

The way you close the company depends on whether it can pay its bills or not.

The company can pay its bills (‘solvent’). You can either:

      • Apply to get the company struck off * (Striking off, means the removal of a company´s name from the official Companies House register. The company name is then available to incorporate by a new company)
      • Start a members’ voluntary liquidation**

* You can close down your limited company by getting it ‘struck off’ the Companies Register, but only if it:

      • Hasn’t traded or sold off any stock in the last 3 months
      • Hasn’t changed names in the last 3 months
      • Lisn’t threatened with liquidation
      • Has no agreements with creditors, e.g. a Company Voluntary Arrangement (CVA)

** You may choose members’ voluntary liquidation if your company is ‘solvent’ (can pay its debts) and:

  • You want to retire
  • You want to step down from the family business and nobody else wants to run it
  • you don’t want to run the business any more

The company can’t pay its bills (‘insolvent’). When your company is insolvent, the interests of the people your company owes money to (its creditors) legally come before those of the directors or shareholders.

  • You must use the creditors’ voluntary liquidation process. ***

*** A director can propose a creditors’ voluntary liquidation. Your company might be forced into compulsory liquidation**** if you don’t pay creditors.

**** Your limited company may be liquidated (wound up) if it can’t pay people or organisations (creditors) it owes money to.

 


Registered Office Address £120.00 per annum

Why use our Registered Office Address? By using our address as your company's registered office address, you will retain your personal address privacy, you will avoid changing the address of your company every time you would like to move houses.

What is more you will make sure that all essential documents from HMRC are directly send to your Accountant

Read more

All companies registered in England and Wales are legally required to have a registered office address. Companies House, HMRC and other official bodies will send notices, letters and reminders to this address. The registered office address can be anywhere in England and Wales. To avoid potential fines and penalties, it is important that all correspondence sent to this address is dealt with promptly. For English companies owned by overseas residents it is a legal requirement to have a registered address in England where official government mail can be sent.

For registered companies, you are required to have a registered address. It is the address of a company to which Companies House or otherwise relevant governing body letters and reminders are sent to. The Company Registered Address must always be an effective address for delivering documents to the company and its Directors/Shareholders.

The Registered Office Address is the address that your company is officially registered at upon incorporation, and is displayed on the Public Registrar at Companies House. As the Registered Office Address site needs to be readily available for post to be delivered to, and if necessary, documents to be signed for. It is not possible to use a PO Box address as the Registered Office Address. Other requirements are that the Company Registration Number and the Registered Office Address must be displayed on your company stationary (letterheads and invoices).

You may use your home address for this purpose but it is not mandatory, nor is it recommended. Ideally, you should use a non-residential address for reasons of privacy and professionalism.

The benefits of a non-residential registered office

  • Due to the public disclosure of corporate information, the use of a residential address could result in unwanted visitors and unsolicited mail turning up at your home.
  • A non-residential registered office in a prestigious and recognised location will appeal to a larger consumer base and the discerning investors.
  • Your company is more likely to be perceived as an established, credible business if it has a professional registered office address.
  • Draws a clear line between work life and home life.
  • A prominent city address can enable new and small businesses to expand their geographical reach by using a prominent city address. This is particularly beneficial for businesses based in small towns or remote areas.

You can change your registered office address at any time after incorporation, as long as it stays in the same part of the UK. You must notify Companies House as soon as possible if your registered office moves. You must display your registered office address on all forms of business stationery, including emails, brochures and websites. In addition to business stationery, you must clearly and continuously display your company’s full registered name on a sign at the registered office address, unless it is primary used as a residential address or your company has been dormant from the date of incorporation. A private limited company must keep some or all of its company records at its registered office address. These include the certificate of incorporation, the memorandum and articles of association, and share certificates (if applicable).

Furthermore, the following records and registers, where applicable, must be kept up-to-date and stored at the registered office for inspection purposes:

  • Register of members
  • Register of company directors
  • Register of secretaries
  • Directors’ service contracts
  • Directors’ indemnities – security against liability claims or legal costs
  • Copies of resolutions
  • Minutes of meetings
  • Contracts relating to purchase of own shares
  • Documents relating to redemption or purchase of own shares out of capital by private company
  • Register of debenture holders
  • Instruments creating charges and register of charges

These records may be kept in hardcopy format in a bound or loose-leaf book, or they can be kept in electronic format.

 

 

 

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Agnes FilipowiczCEO Director/Accountant
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