Many people, when they decide to set up a limited company, wonder what they need to do now they’re a director with responsibilities.
I’ll go through each of the main things to bear in mind in this blog, and hopefully make things clearer for you.
Administration
This involves the fact that a company is a separate legal entity to yourself and this can have a few knock-on effects. From both a tax and a legal perspective it’s separate, so it will need a separate bank account.
The only time you wouldn’t do this is if the company is dormant.
Insurance
You also need to consider insurance such as professional indemnity, particularly if you have employees. I’d recommend you speak to an insurance broker or other expert to guide you through the process of selecting the right cover for your needs.
Getting money out of the account
Another important element is getting money out of the account, which I cover in greater detail here. Remember, the money that’s in the company is not yours, so you need to think about how to take it out and be as tax efficient as possible.
You can do this as a shareholder, via dividends or through payroll.
Deadlines for a Limited Company
There are two main organisations you need to report to. The first is Companies House and the other is HMRC.
1. Companies House
There are three things you have to do here.
Confirmation statement
The first is a confirmation statement, which is a way of letting them know that the information they have is all present and correct.
You only have to send them this once a year, but you only have two weeks to get it all filed, so be quick off the mark. If you don’t, they will flag warnings to let people know that you’re late with sending the information back, and if you continue to delay they will strike you off.
Note that there is a fee for doing this, and it’s done annually (or within 12 months of the last confirmation status). If you do more than one confirmation status within a year the second one is free. You might decide to do this if the first is based on when you incorporated your company, and the date is different to the date your annual accounts are due.
Updates throughout the financial year
The second thing to consider is that there are also things that you have to update throughout the year, particularly ‘persons of significant control’.
Annual accounts
You also need to submit your annual accounts, which are due nine months after your year end.
You can set any date you like as your year end, but you need to get your accounts submitted in time. You will be fined if these are late, and if they are one month late there’s a bigger fine, and after three months the fine increases even more. This has to be done even if you haven’t done any trading, and in that case there’s a scaled-down way to do so.
2. HMRC
There is also information required for HMRC; the Corporation Tax Return. The payment for this is due nine months after your year end, but the tax return itself isn’t due for 12 months after.
Unless HMRC have been notified that you don’t need to do a Corporation Tax Return, it is mandatory. This is something that often catches people out. People with a dormant company assume that because they’ve made no profit the Return isn’t required, but it is.
You’ll also need to register separately for another tax that you need to deal with, such as payroll and VAT.
Becoming a limited company can feel daunting and there certainly are things to organise and consider, but with the right knowledge and support, there’s no reason the transition can’t be smooth.
If there’s anything you still feel unsure about, drop a note in the comments or get in touch and we’d be happy to help clear it up for you.
