Starting a company takes a serious amount of effort, no matter how many times you’ve done it – the modern business world is more competitive than ever.
To stay ahead of the competition, there are a variety of different tasks that need to be taken care of to maintain your business and stay compliant with the law.
In this blog, we’ll explore what you need to know when starting a limited company, and how you can set things up the right way from the start.
A new legal entity
When you create a limited company, you’re creating something known as a separate legal identity.
This means the company is its own entity – if it goes under, your personal liability for it is limited, and if it does well the money won’t go straight in your pocket.
Not only does this make your business activities more secure, it also adds an element of credibility to your affairs.
Limited companies pay corporation tax on their profit, at a rate of 19% in 2021/22.
As a company director, you can extract an income from your company through a salary by setting up a PAYE scheme. You can also take dividends from its profits. You’ll need to file a self-assessment tax return to report your personal income and expenses.
Keeping your business and personal finances separate with a limited company structure comes with a few benefits.
You’ll be more tax-efficient – not only will your take-home pay normally increase, but your overall tax situation will be easier to manage.
You’ll be able to run business expenses through the company, although the rules for this are slightly different compared to working as a sole trader, so make sure you’re clear on what you can claim.
Move everything online
If you start online, then you’ll never look back – cloud accounting software is here to stay and will make running your business so much easier.
Whether it’s Xero, FreeAgent or any other online platform, the ability to see your accounts whenever you need to is a game-changer.
You’ll be able to make quick business decisions, with up-to-date financial data and insight that you simply wouldn’t get with a spreadsheet.
Important HMRC dates
At the end of the financial year, you’ll need to prepare a set of full (‘statutory’) annual accounts and a company tax return.
There are some other dates to be aware of too:
|File first accounts with Companies House||21 months after the date you registered with Companies House|
|File annual accounts with Companies House||9 months after your company’s financial year ends|
|Pay corporation tax or tell HMRC that your limited company does not owe any||9 months and 1 day after your ‘accounting period’ for corporation tax ends|
Speak to your accountant
We’re here to talk through any questions that you may have about starting your company – whether that’s business planning or tax queries.
It’s easy to see your time get eaten up by the day-to-day affairs of running the company. But by outsourcing your accounting, you’ll get your time back.
Get in touch with us today to see how we can help you and your business.