Limited Company Accounting Support & Company Registration

Limited companies provide numerous benefits, from tax savings to limiting your liability.

But the first step is to understand what a limited company is exactly, and whether setting up such a company can help you achieve your goals. This article will clearly explain the pro's and con's so you can make an educated decision.

In a nutshell, a limited company is a private company that's a separate legal entity from its owner(s). For freelancers and contractors, a limited company is one of the three main business structures that you may use to run your business (the others being sole trader and umbrella companies).

In this article, we walk you through:

• What a "separate legal entity" means
• The different types of Limited Companies
• The pros and cons of setting up a Limited Company
• How to start a Limited Company

If you're planning to start out on your own, one of the most important decisions you'll need to make is figuring out how you should structure your business.

As a freelancer, contractor or small business owner, there are three main types of legal structures you should consider:

• Sole proprietorship
• Limited company
• Working through an umbrella company

It's a decision that requires careful consideration, and it's important that you seek advice from qualified professionals when you weigh out the pros and cons of each business structure. To begin with, you need to have a good grasp of the basics - and here's where our guide comes into the picture.

Your responsibilities as a limited company director include:

• Your company must be registered at Companies House
• Your company's annual accounts must be filed at Companies House
• A Confirmation Statement must be submitted annually. This can be done online or via post. This is a filing requirement introduced in 2016 to replace the Annual Return (Form AR01).
• Submit an annual Corporation Tax to HMRC. Any outstanding tax must be paid within nine months and one day of your company's year-end accounting.
• Register for Self Assessment with HMRC, and submit your personal tax return each year.
• If you have employees and are running the company payroll, you need to report your employees' payments and deductions to HMRC on or before your employees' payday. You need to pay what you owe to HMRC each month.
• If your VAT taxable turnover exceeds the VAT threshold, you'll need to register for VAT and complete your VAT returns online at the end of every financial quarter.
• Maintain proper company records

A company number (also known as a company registration number) is an eight-digit number that is assigned by Companies House to a company upon incorporation.

You can locate the number on your certificate of incorporation. The first digit of the company number is usually a zero, and is omitted in most instances. As such, your certificate of incorporation will show a seven-digit company number.

As the director of a limited company, your responsibilities include:

• Your company must be registered at Companies House
• Your company's annual accounts must be filed at Companies House
• A Confirmation Statement must be submitted annually. This can be done online or via post. This is a filing requirement introduced in 2016 to replace the Annual Return (Form AR01).
• Submit an annual Corporation Tax to HMRC. Any outstanding tax must be paid within nine months and one day of your company's year-end accounting.
• Register for Self Assessment with HMRC, and submit your personal tax return each year.
• If you have employees and are running the company payroll, you need to report your employees' payments and deductions to HMRC on or before your employees' payday. You need to pay what you owe to HMRC each month.
• If your VAT taxable turnover exceeds the VAT threshold, you'll need to register for VAT and complete your VAT returns online at the end of every financial quarter.
• Maintain proper company records.

• What is a Limited Company
• 10 step process for setting up a Limited Company

When you set up a limited company, you'll enjoy many advantages you don't get as a sole trader. Not only is it a tax-efficient way to run your business, it's also a great way to limit your personal liability and increase your credibility with customers. Additionally, it could open new avenues of work that wouldn't be open to you if you were operating as a sole trader, especially some contractor roles.

One of the disadvantages of running a limited company is that it involves a lot of paperwork, but with the help of this guide, we'll clear away the jargon and tell you exactly what you need.

If you're unsure about whether a limited company is right for you, check out our handy article comparing the differences between Limited companies and Sole Traders to see which business entity is right for you.

If you've got more important things to do than dealing with extra admin, you can always take advantage of one of our accountancy packages and we'll do all the forms and applications for you.

If you're looking to the future with the hopes of beginning a journey running your own startup, chances are you're feeling some mixture of excitement, trepidation, and uncertainty when it comes to the finer details of your plan.

Starting your own business is an immensely fulfilling process and an excellent means to flex your creative muscles, but there's a lot of humdrum of business behind the process of turning a vision into a dream.

One of the most important (and one of the earliest) decisions in this process will centre around your business's formation. You'll have to select which type of business structure best suits your goals for the future.

While the choice may sound easy, you'll be well-served by giving the decision ample consideration. The business structure you select will have measurable implications on the way you make money and do business. It'll impact:

• How much tax you pay
• Your degree of personal liability should the business fail
• How much administrative work is involved in the business (both before it comes to fruition and over the course of its life)
• Your ability to finance and fund your efforts

If you make the wrong selection when it comes time to choose a business structure, you could be faced with a myriad of complications in the future.

Paying professionals for guidance and advice once things go wrong is costly and, for many, an embarrassing affair-performing research well in advance will ensure you're making the best choice for your company and that you can avoid losing out on money or pride later on.

Registering a company is a one off cost of £12 and done through Companies House. However, there are a few different ways that you can get this fee waved with other business services that you need.

We'll walk you through how to register your company for free and the perks that you'll get with each.

What are the advantages of a private limited company?

In the UK, the majority of self-employed people operate as sole traders. While there are many advantages to being a sole trader, you could take home more money and give your business a professional edge by setting up as a limited company.

In this article, we'll look at the advantages of operating as a private limited company to see how it could benefit you. If you're interested in seeing whether a limited company could be a good option for your business, check out our Business Structure guide. If you're already operating as a sole trader, making the jump to a limited company is more straight forward than you think.

Advantage 1 ‚- You pay less tax and National Insurance Contributions

Who can turn their nose up at the prospect of increased take-home pay? Well, that's the principle benefit of setting up a limited company and one of the main factors that drive people to switch from a sole trader.

As a director of a limited company, the way you pay tax is different from how you pay as a sole trader. As a sole trader, you'll pay 20% or more on everything you earn over the tax threshold. As a limited company, you typically pay yourself a small salary so you incur as little personal tax as possible. The majority of your income will come in the form of dividends that are taxed at a much smaller rate, meaning you're able to maximise your take-home pay.

As well as the tax benefits, paying the majority of your income through dividends means that you're able to pay less National Insurance Contributions (NICs) as these do not apply to dividend payments.

Example - Here's a quick comparison of the difference in take-home pay for a sole trader and a limited company.

1. Sole Trader

   Revenue: £40,000

   Expenses: £1000

   Tax at 20%: £5,300

   Class 2 NIC: £158.60

   Class 4 NIC: £2,655

   **Take-home pay: £30,886.40

   **

2. **Limited Company

   **Revenue: £40,000

   Expenses: £1000

   Corporation tax: £5741.04

   Dividend tax at 7.5%: 1,406.92

   Take-home pay: £ 31,852.04

As you can see, you save £965.64 as a limited company. What's not to like?

Tax season can be stressful for small business owners.

You don't have the convenience of having an employer filing for you. While there are all kinds of tips and strategies for managing your taxes, the first order of business is to get key deadlines noted on your schedule, and determine how and when to make your payment.

Here's what you need to know:

As a contractor running your own limited company, you need to be aware of the following deadlines:

• File end of year accounts to Companies House: 9 months after your company year ends. If it is your first year, the due date will be 21 months from the date your company was incorporated.
• File your confirmation statement: This is due on the anniversary of incorporation each year
• File your corporation tax return: This is due 12 months from your company year end.
• Pay your corporation tax bill: Payment is due 9 months and 1 day after the end of the company year
• PAYE RTI (Real Time Information) Returns: A submission of your company payroll has to be submitted in real time each month to HMRC. This is due on or before the intended salary payment. Any tax due from this can be payable on a quarterly or monthly basis as follows:
• the 22nd of the next tax month if you pay monthly
• the 22nd after the end of the quarter if you pay quarterly
• VAT returns: Usually submitted on a quarterly basis, the company VAT is due to be filed and paid within 1 month and 7 days from the quarter end.
• Self Assessment tax returns: Your Self Assessment Tax Return is always due to be filed by the following 31st January after the end of the tax year. This date is also the same deadline for payment of any tax due but you may also have a payment on account due by 31st July after this.
• P11D: The submission of the company P11D will need to made by 6th July with any payment of National Insurance arising due by 19th July (22nd if paid electronically)

You can change your company's year-end-otherwise known as the accounting reference date (ARD). Changes can be made to your current financial year or the year before.

Your company's financial year can be shortened as many times as you want, with the minimum duration you can shorten it by being one day. You can lengthen your company's financial year by up to 18 months once every five years. If [other conditions apply](https://www.gov.uk/change-your-companys-year-end#:~:text=You can change your company's,the one immediately before it.), such as if your company is in administration, you'll be able to lengthen your financial year more often.

If you're paying salaries to employees or directors, you need to register for PAYE and pay your PAYE bill to HMRC.

• Monthly payments: Your PAYE bill is due on the 22nd of the next tax month.
• Quarterly payments: Your PAYE bill is due on the 22nd after the end of the quarter.

There are various ways to make your payment.

• Same or next day payments: online or telephone banking, CHAPS
• Payments processed in 3 working days: card payments (online), Bacs, cash or cheque payments at your bank or building society, Direct Debit, by cheque through the post
• Payments processed in 5 working days: Direct Debit (if it's the first time you're setting up a Direct Debit payment)

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As a limited company director, there are several important deadlines you need to be aware of. These are:

• File your Self Assessment tax return: 31st January 2022 for the 2020/2021 tax year
• Pay you Self Assessment tax: 31st January
• Registering for VAT: Register for VAT within 30 days of meeting the conditions for [compulsory registration](https://www.gov.uk/vat-registration/when-to-register#:~:text=Compulsory registration,over the last 12 months)
• Filing and paying VAT returns: 1 month and 7 days after your VAT quarter end date
• Company accounts: First year accounts are due 21 months after incorporation. Subsequent accounts are due 9 months after the year end
• Corporation tax registration: You need to register within 3 months of trading commencing.
• File your corporation tax return: 12 months following the end of your accounting period
• Corporation tax payment: 9 months and 1 day following the end of your accounting period
• File your Confirmation Statement: You need to file a confirmation statement every 12 months, within 14 days after your confirmation date.