Are you thinking of setting up a Limited company, and you’re not sure where to start?
No problem, Aardvark Accounting can help. This guide will help you to understand what a Limited Company is and what setting one up involves, without the jargon.
What exactly is a Limited Company?
A Limited company is an organisation that is set up to run your business. It has its own identity, and trades under its own name. The company is fully responsible for everything it does and its finances, these are separate to your own personal finances.
The company will be owned by shareholders. This could be one shareholder or have multiple shareholders. All income and expenses will go through the company, which will be taxed accordingly. Then any profits can be paid as a dividend among the shareholders.
Setting up a Limited Company
- Getting started
Before you do anything, you will need to choose a name for your company. The name of your business is very important, but picking more of a general name is advisable in case you plan on changing this or expanding in the future.
Consider who will be the shareholders. Depending on your circumstances, this could just be you or you may want to bring other shareholders in to the business. However speak with an expert first, they’ll be able to advise the best structure to make sure you’re making the most out of your company.
- Get set-up on Companies House
Once you have decided on the two points above, it is time to register the company with Companies House.
- Open a business bank account
The company will need to set up a bank account in the name of the business. It can be difficult and time consuming to open a business account via some banks, so it might be worth considering opening an account online using an alternative provider. This will help to save time and simplify the application process.
- VAT and PAYE registrations
It is not necessary to register your business for VAT unless you have reached the VAT threshold in the past 12 months, or you will in the next 30 days. You may wish to discuss your options with an accountant, if you are uncertain about whether registering for VAT is required for your business.
If you are required to register then you can do this online via the HM Revenue and Customs website. Registering for VAT means that you will need to charge an extra 20% for your products or services.
PAYE ‘Pay As You Earn’
You will need to set up a payroll for your company, even if there is only one employee. This allows Income Tax and National Insurance Contributions to be deducted from the salaries paid to all staff in the company.
- Get insured
It is important to ensure that you have the right insurance in place for a Limited Company. This provides protection against your company if a compensation claim is made against you. Your insurance options will vary depending on the type of company you run, and the risks that you will face.
- Public Liability Insurance – a vital cover for many businesses. This will protect the business if someone is injured or their property is damaged.
- Employer’s Liability Insurance – a legal requirement if a Limited Company has employees, contractors, casual or temporary staff. It will cover any claims that come from employees who have been injured or have become ill as a result of working for the company.
- Professional Indemnity Insurance – worth considering for your business if you provide services to other businesses. This will protect the Company in the event that it provides incorrect advice that causes a client a financial loss.
- Start-Up expenses
If there are any start-up expenses when getting set up, these may be able to be claimed against any future revenues that a company generates. Always keep the receipts for any expenses incurred.
- Start trading
Now that the company is registered and has everything set up, it’s ready to start trading. Let the fun begin!
How Aardvark Accounting can help you?
We can help incorporate the company, advise and prepare VAT and PAYE registrations. Plus, we’re the best value for personal service and have tailored accountancy packages to suit you.
With a FREE incorporation and someone on hand to make sure it’s all set up correct, contact Aardvark Accounting today. We’ll do the “aard” work for you.
01425 471917 or contact us here