How can Audtax help you with company formation accountants?
Are you a sole trader considering whether to take the leap and register as a limited company? Making the decision to change your business structure can have significant implications for you and your business.
You may find yourself asking questions such as:
- Is it the right time?
- What are the benefits of becoming a limited company?
- How will it change my tax liability?
- How much does limited company registration cost?
- What are the legal and admin requirements?
Similarly, you may be in the process of starting a new company and wonder which structure is the right one for you.
While there are undeniable advantages to registering as a company, it depends entirely on your personal situation, the stage of your business journey and what your goals are for the future.
That’s where AudTax can assist you.
We are experts in company formations, and with our guidance and support, we can help you navigate the pros and cons, ensuring you make an informed choice.
Our hassle-free company registration services cover every aspect of the process. Just provide us with the information we need, and we will liaise with Companies House and register your company on your behalf.
In addition, we can help you to establish a business bank account and even provide an official service address if you don’t wish for your home address to be used on the public register.
Along with the registration process, we will ensure that you fully understand the legal and tax obligations of your new company, as well as give you advice on shareholding, directors and who should be appointed as secretary. In the absence of an in-house company secretary, we can offer our company secretarial services.
As opposed to company registration agents, who specialise in company formation packages alone, we are a team of fully qualified and respected accountants who can offer your business ongoing accounting support to help you reach your financial goals.
Is the time right for you to form a limited company? Talk to the experts at AudTax for help and advice today. If it’s the right path for you, we will help you to set up your company.
What are the advantages when you register a company?
Depending on your individual circumstances, making your company limited offers several benefits, the main being:
Limited liability protection. Sole traders have no legal distinction from their business. So if the business incurs debt or faces legal challenges, the individual is liable, and their personal assets may be at risk.
As a company director, you are legally separate from your limited company, and you have limited liability, i.e. in the case of financial difficulties or legal issues, your personal assets are protected.
Tax efficiency: Up until recently, the main rate of Corporation Tax was lower than the basic rate of Income Tax, representing a tax saving for many business owners. Today, the rates are a lot closer, but there are still tax advantages to be enjoyed.
Company directors can structure their income through a combination of salary and dividends, potentially resulting in personal tax savings. And also, limited companies have a greater range of deductible expenses, which can reduce the company’s Corporation Tax liability.
Professional image: Operating as a company can enhance your professional image and credibility with clients, suppliers, and partners.
Access to funding: Incorporating as a company may improve your ability to secure funding from banks and investors.
Perpetual existence: A limited company can exist independently of its owners, providing continuity to its customers when the owner retires or passes away.
Brand protection: Registering your company name can provide legal protection for your brand and prevent others from using a similar name, safeguarding your reputation and intellectual property.
Employee benefits: As a limited company, you can offer employee benefits, such as pension schemes, share options, and bonuses, to help employee retention.
What are the cons of setting up a limited company?
Potential disadvantages of registering as a limited company include the following:
No tax savings: In some cases, operating as a sole trader or limited liability partnership might result in a lower overall tax liability since these structures have simpler tax reporting requirements and may offer more flexibility in offsetting losses against other income sources.
Extraction of profits: Sole traders have more flexibility in extracting cash from their business.
Administrative burden: Running a limited company comes with a lot more administration and legal reporting requirements.
The company registration process
If you have decided to register a UK limited company, then congratulations! We just need a few details from you, and we can register your company to save you time and hassle.
Here is an overview of the typical company formation process:
Company Name: First, you must choose a unique name for your company that complies with the conventions set by Companies House.
Identify the right SIC code: A Standard Industrial Classification code is a five-digit code that is used to classify a company’s principal business activity.
Registered Office Address: You must provide an official address where correspondence and legal documents from HMRC and Companies House can be sent. If your company has no fixed location, AudTax can provide a registered office service.
Directors and shareholders: You need to identify the directors and shareholders of the company. Directors are responsible for the management and administration of the company, while shareholders hold ownership interests. To register a company, you need to provide the full name, date of birth, nationality, occupation and residential address of each director/shareholder.
Identify a PSC: A Person with Significant Control is an individual that has significant control over a UK company or Limited Liability Partnership (LLP).
Complete the Memorandum and Articles of Association: These are legally binding company documents that serve as the foundation of your company’s constitution. They set out its purpose and activities, plus how it will be governed.
Complete and submit documents: Once we have all of these details, we will complete the necessary formation documents, including Form IN01. We will then submit these documents (usually online) to Companies House, along with the registration fee.
Certificate of Incorporation: Upon successful review and approval, Companies House will issue a Certificate of Incorporation. This could be in as little as 24 hours (depending on the Companies House workload). We will then send you your new digital company documents.
Business bank account: As a private limited company director, you are legally separate from your company, so it’s important to establish business bank accounts. AudTax can help you to set up a new business account.
What are the legal obligations of a private limited company?
Once registered, it is a legal requirement for your new company to submit various documents to Companies House on an annual basis. You must also keep the public register updated. These tasks fall to the company secretary, usually a designated director.
This can be very time-consuming, which is why many of our clients opt for our company secretarial services.
Compliance and reporting
Statutory registers and records: You must maintain and update company details such as registers of directors, shareholders, and the person with significant control (PSC).
Annual Accounts: This includes the company’s financial statements, such as the balance sheet, profit and loss statement, and cash flow statement. In some cases, the company is required to submit an independent auditor’s report to confirm the validity of the accounts.
Directors’ Report: Providing an overview of the company’s activities, financial performance, and future prospects. This report may include information on significant events, business strategy, and corporate governance matters.
Confirmation Statement: This confirms the company details, such as directors, shareholders, registered service address, and share capital.
Corporation Tax Return: Companies must file Corporation Tax returns to HMRC, which must also be disclosed to Companies House.
Frequently asked questions about limited company formations
Is it worth starting a limited company?
The answer depends on your individual circumstances. For some, it’s important to appear more professional to clients. For others, the reduction in their own and their company’s tax liabilities is a major factor. It is important to understand the implications, so if you are unsure, you should consult a professional accountant.
Can one person be a limited company?
A limited company requires at least one director and shareholder. They can be the same person, so in answer to the question, yes. You can be the sole director and shareholder of your own company.
Can I register a limited company by myself?
The simple answer is yes. However, as accountants, we possess the expertise, knowledge, and up-to-date understanding of regulations to ensure you make the right decision on your business structure and understand your liabilities. We can also handle the administration, saving you time.