Setting Up and Running a UK Limited Company

A limited company is a business entity with a separate legal identity from its owners and shareholders. To set one up, you must register it with Companies House, a process also known as company formation or incorporation. Here's what's typically involved:

• Choose a company name and type: You'll need a unique company name that complies with certain rules. You must also decide if you'll be a private or public limited company.

• Appoint officers and shareholders: A limited company must have at least one director and one shareholder. Directors are legally responsible for running the company and must be at least 16 years old.

• Register with Companies House: You can register your company online, which is the quickest and most efficient method, or by post. You'll need to provide details like the company name, a registered office address, and the Standard Industrial Classification (SIC) code that describes your business activities. The registration typically costs £50 online and is usually completed within 24 hours.

• Register for Corporation Tax: After starting business activities, you must register the company for Corporation Tax with HM Revenue and Customs (HMRC) within three months.

• Ongoing responsibilities: As a limited company, you have legal obligations to file annual accounts and a confirmation statement with Companies House every year, even if the company is not trading. You must also inform Companies House of any changes to the company's registered details.

Filing Company Accounts and Statements

• Annual Accounts: These are a legal requirement for all limited companies. They typically include a profit and loss account, a balance sheet, and a director's report. The deadline for filing accounts with Companies House is nine months after the company's financial year ends. Companies must also file annual accounts with their Company Tax Return to HMRC within 12 months after the accounting period ends.

• Confirmation Statement: This statement confirms that the company's information held by Companies House is correct. You must file it at least once every 12 months, and it includes details on directors, shareholders, and the company's SIC code. The fee is £34 for online filing or £62 by post.

Managing a Company's Finances and Taxes

• Payroll: If you employ staff, you must register as an employer with HMRC and set up a payroll system. This is needed to operate the Pay As You Earn (PAYE) system, which deducts Income Tax and National Insurance Contributions (NIC) from employees' wages. You can run payroll yourself using software or outsource it to an accountant.

• Self-Assessment Tax Returns: This is the system used by HMRC to collect Income Tax from individuals whose taxes are not automatically deducted through PAYE. You must file a self-assessment tax return if you are self-employed, a company director, or receive income from other sources like property rental or investments. The tax year runs from 6 April to 5 April, and the deadline for filing online is 31 January following the end of the tax year.

Changing or Closing a Company

• Changing Company Details: You must notify Companies House of any changes to the company, such as a change of name, registered office address, or director details. Online filing is generally faster than post.

• Closing a Company: The process for closing a limited company depends on whether it can pay its bills. A company that can pay its bills can be voluntarily struck off the register. A company that cannot pay its bills is considered insolvent, and there are different procedures, such as a creditors' voluntary liquidation or administration. A company that is no longer trading but still registered must still file annual accounts and a confirmation statement.