Creating your limited company
INTRODUCTION
This section gives you an overview of what you must do if you have decided to run your business as a limited company.
CREATING A COMPANY
Limited companies do not exist until they have been officially created - the process of creating a company is usually known as ‘company formation’. The process can be completed online in minutes, and you will have your new Company within around three hours. You can form your own company online via our website here.
DECISIONS
You will need to make some initial decisions at the time your company is formed. For example, your company will need a registered office, this is simply an official address to which official letters can be sent and where certain records must be kept. You can even use your home address as your company address.
Setting up a limited company means that you are running your own business and will have complete control. You will be the company director, operate the company bank account, and be responsible for the affairs of the company. Running your own limited company is the most tax efficient way of working as you keep more of your income. Keeping complete financial and administrative control ensures your money is not risked with any third party administrator. There are of course more responsibilities in terms of paperwork and deadlines, but a good freelancer accountant will be able to minimise this burden.
VAT
If your sales exceed a certain figure you need to register for VAT, there are benefits to registering for VAT voluntarily before you reach that figure. The current (tax year 2018/18) threshold for VAT is £85, 000.
Companies House
As part of your responsibilities, you need to notify Companies House of any changes to your company. If you have formed your company through Freelance UK you can log in to your admin section to perform many of these, such as change of registered address or change of Directory/Secretary particulars. Alternatively, you can do this direct with Companies House through Webfiling. Their system will enable you to file changes to your company information online, as a new user you will need to apply for authentication codes first of all.
You will also need to complete an Annual Return. (This form comes from Companies House and asks for details of directors, secretary, address, shareholdings and trading activities, completed on an annual basis).
HMRC
Various forms will need completing throughout the course of the year, all of which your accountant will help you with. You can expect:
- Form CT41g (New Company enquiry form)
- VAT Returns (Assuming you are VAT registered you will get one of these every three months)
- Corporation Tax Return (This is the Company tax return and is sent to the Annual Accounts to the HMRC, prepared once a year by your accountant)
More on running your business and limited companies.
