What are the requirements?
Setting up, owning and operating a limited company is a major commitment. Once you decide to go for it, you will be responsible for each and every step of the process and for ensuring these are all managed and completed correctly. There are strict legislative deadlines and harsh penalties should these be missed.
- Incorporation - This is the first stage of the process, where you create your own company. We will cover the detail later in the document, but registration in itself is a relatively simple process. You can do it yourself, your accountant could do it for you, or you could employ the services of a company formation agent. Either way, the objectives are the same, to register your new company and all the details at Companies House. Incorporating lends credibility to the business. It also means you have to appoint a director who is ultimately responsible for running the business.
- Directors responsibilities - It is the director’s responsibility to ensure that the company meets it obligations and that it is run in accordance with The Companies Act 2006 (and re-inacted). According to this act, all Private Limited Companies must have at least one director. Typically, you will perform this role yourself. You need to ensure that the company complies with company law, that it accounts properly with full disclosure, that it makes all statutory returns, is adequately insured and meets all health and safety obligations.
- Administration and compliance - Ensuring the company meets all of these obligations and complies with law creates a degree of administration. You will be responsible for filing company accounts, for arranging payment of Corporation Tax, National Insurance and PAYE obligations. Depending upon the turnover of your business, you may also have to file VAT returns. These need to be done correctly, to the required specifications by the imposed deadlines and any tax due must be paid on time. Being the director of a business carries considerable responsibility. A specialist accountant such as Brookson will work with you to minimise the administration.
What are the benefits?
Whilst running a limited company does have its fair share of responsibility, and the administrative responsibilities are certainly greater than other ways of working, there are many advantages too.
- Limited liability - In simple terms, if you run a Limited Company you are protected should things go wrong. Assuming all rules have been followed, as a director you will not be personally liable for any financial losses made by the company.
- Separate entity - A Limited Company is a legal entity in its own right. This means that everything from the company bank account, to the ownership of assets relates to the business. They are totally separate from the interest of the directors and shareholders.
- Tax - As a director and shareholder of a limited company you could elect to take the majority of your income in the form of dividends, which enables you to manage your own tax liability and potentially save on National Insurance costs.
- Perception - If you plan to do business with larger companies, it can help if you are working via a Limited Company as it gives off a more professional image. In some industries, it may even be a mandatory requirement as they will not deal with sole traders or partnerships.
- Protection - As well as the limited liability protection mentioned above, once you have successfully registered your company, your company name is protected by law. Companies House has very stringent rules for the naming of companies so no one else can use the same name as you, or anything deemed too similar.
- Ownership and succession - As the sole shareholder in your business, you own the business. However, a Limited Company can easily transfer ownership of shares, or existing shareholders can sell a stake in the company to other parties at any time. If for example a shareholder wishes to retire, or bring a new director on board, it is far easier to transfer ownership, or part ownership, of a Limited Company than it is with a less formal business structure.
- Take home pay - It’s safe to say that this is the area where you can really reap the rewards of running your own Limited Company. The only person you need to pay as a Limited Company is yourself – combined with the tax efficiencies on offer, this means you can keep anything from 81 to 86 percent.
How Brookson can help
Whether you are a contractor, freelancer or self-employed professional, we believe that you, and we, should always know where your business is at. We have a great team of people who work closely with you, every step of the way to help you work more efficiently and to make more of your earnings potential.
Brookson will help you manage your limited company accounts and guide you through the legislation and compliance, you benefit from the reassurance of knowing that you are receiving the best accountancy support and that you are working compliantly at all times.
Our accountancy, tax advice and friendly, proactive Customer Services Team take away as much of the administrative burden as possible and provide the guidance you need to meet your responsibilities.
We relieve the time and hassle of running your limited company with our ground-breaking Connect technology, which updates your company accounts on a daily basis*, allowing you to make informed decisions by giving you peace of mind knowing that you are always up-to-date and totally compliant with HMRC guidelines.
Find out more about what our all-inclusive limited company service offers contractors, freelancers and self-employed professionals a complete accountancy service, backed by our reputation for reliability, top class advice, innovative technology and an excellent Customer Services Team.