UK Limited Company Formation





Majority of the companies registered at UK are private limited companies by share. This is a popular structure because directors can be anywhere from the world, they need not be a UK resident. He can run his business from his home country. You just need a registered office address at UK .

1. Advantages:

One director

One shareholder

Director and shareholder can be one and the same person.

Formation takes only 3 hours.

Company formation is completely an online process. There are no documents to sign.

UK registered address: no need to separately hire a place for a starting company. They can use their home address / accountant address.

2. Compliance:

At the end of the financial year, accounts must be prepared and filed with Companies house and tax office (HMRC) before their due dates.

For Companies house: accounts should be filed within 9 months of the financial year end.

For Tax office (HMRC): Tax return should be filed within 12 months after the end of the accounting period it covers. If tax liability is there, Corporation tax should be paid within 9 months and 1 day after the end of the accounting period.

3. Cost: Cost for forming UK ltd Company is £ 13.



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Deciding on the Business Structure

Once you have decided on starting your company the next step is to decide which business structure to choose. You must look at the pros and cons, the ongoing filing and the tax related matters. There are four main start-up structures. They are mainly:

Sole trader

Limited Liability company or partnership (LLP)

Partnership

Public limited Company (PLC)

A business Plan is a key factor for start up and taking your business ahead. It is a road map that helps you to your goals. Having a business plan has proved to be a vital factor in the initial phase of the business no matter whether your business is big or small. Writing a business plan helps you to prioritize your company’s goals and pin down how you will attain it. It can include your market research, strategies, product development, finance and investment plan , etc.,

Limited Company UK-Director and Shareholder Information

Limited Company Directors and Shareholders



Directors:



A director of a limited company is responsible for the management of the company. The shareholders appoint directors to see to the day to day running of the business.

Directors often own shares in the company they work for:

When two or three people start a company together, they often see themselves as partners in the business. Usually, they will allocate shares to themselves and appoint themselves as directors. However, they should always be aware of the different roles of directors and shareholders.

Many large companies issue shares to directors and key employees, as part of a bonus package. Some companies insist that their directors buy shares in the companies they manage. Share ownership is intended to align directors’ interests with that of their employers; the other shareholders.

Who can be a director?



Anyone can be a director subject to the following:



*They must be at least 16 years of age.

*They are not disqualified by a Court Order.

*They are not an undischarged bankrupt.



It is also worth noting that:



*A director does not need to be a UK resident

*A corporate body can be a director, but a company requires at least one human director.



Information about directors



Companies House needs the following information about each director:

*First Name

*Last name

* Director’s service address, if different from home address.



If the director is a corporate body, the following information is required:



*First and Last name of authorised person

*Name of Company or organisation

* Registration Number

*Place registered

*And, if it is resident in a Non-EEA member state:



o The law that governs it.

o The Legal Form of organisation.



And, to deal with the absence of a signature, the answers to 3 authentication questions, taken from any of the following:

1-mother’s maiden name- the first 3 letters

2-father’s first name-the first 3 letters

3-Colour of eyes-the first 3 letters

4-telephone number-the last 3 digits

5-town of birth-the first 3 letters

6-National insurance number- the last 3 digits

7-Passport number-the last 3 digits



Director’s Service address



Companies House will publish an address for a director, on their web site. Publication enables official notices and correspondence to be sent to directors. However, publication means that a director’s address is no longer private. In order to allow directors to retain their privacy, Companies House will also accept a service address. It is the service address that will be published. We offer directors a FREE service address, if their Company is using our Registered Service.

Who is a Shareholders?



Companies are jointly owned by their shareholders, who are also known as members. A shareholder’s stake in a company is represented by the number of shares (units of ownership) he owns.

Unless sanctions apply, almost anyone has the legal capacity to be a shareholder in a UK registered limited company.

Individuals, trusts, partnerships, other corporate bodies and Governments, wherever resident, can be shareholders.



Subscribers The first shareholders are the subscribers to the company’s memorandum of association. They agree to buy the number of shares allocated to them.



There are 3 ways to become a shareholder in a company:

By subscription to the Memorandum of Association when forming a new company.



By gift or purchase of shares from another shareholder.



By subscription to a new issue of shares by the company.







































The information required:

First Name



Last name



Full postal address





































To deal with the absence of signatures in the online process the 3 authentication questions same as above can be selected.

Limited Company- Registered Office Address UK

Your registered office address is where official communications will be sent, for example letters from Companies House and HM Revenue and Customs (HMRC).

The address must be:

A physical address. You can use a PO Box but must include a physical address and postcode after the PO Box number.



in the same country your company is registered in, for example a company registered in Scotland must have a registered address in Scotland



You can use your home address or the address of the person who will manage your Corporation Tax if these addresses meet the rules above.



Your company address will be publicly available on the register.



If you wish to keep your home address private you can use our registered office address service. The office address is located at Surrey for only £60.







































Change of Registered Address

You must tell Companies House if you want to change your company’s registered office address. If the change is approved, they will tell HM Revenue and Customs (HMRC).

Your company’s new registered office address must be in the same part of the UK that the company was registered (incorporated).

For example, if your company was registered in England and Wales, the new registered office address must be in England or Wales.

Your address won’t officially change until Companies House has registered it.

You can submit form AD01 online to change your registered office details.

UK Limited Company- Director Responsibilities

If you have set up a limited company, there are a number of duties you will have for e.g. legal and financial responsibilities, if you are a director of a company. The Companies Act of 2006 outlines some of the duties of a company director

Duties of limited company directors

Duty to act within your powers as a company director

Duty to promote the success of your company

Duty to exercise independent judgement

Duty to exercise reasonable care, skill and diligence

Duty to avoid conflicts of interest

Duty not to accept benefits from third parties

Duty to declare interest in proposed transaction or arrangement with the company

Financial responsibilities

As a company director, you have several accounting-related obligations. Although you should employ a business accountant to perform all (or most) of these tasks, you are ultimately responsible to ensure that all tasks are carried out:

Keep good accounting records from which accounts can be prepared which give a true and fair representation of the financial position of the company.

You must submit accurate company accounts, and file them on time with Companies House.

You must submit your corporation tax return (Form CT600) to HMRC and pay any tax liabilities due.

You must deal with the correct payment of staff (and yourself) – including the deduction of income tax and national insurance contributions, where they apply.

You must trade solvently, ensuring that you are able to meet the financial liabilities of your business. Legal responsibilities of company directors

You are responsible for completing and filing a Confirmation Statement or annual statement every year as it was previously called.

To produce and maintain a register of Persons with Significant Control (also known as a “PSC register”). The PSC Register must be filed, as part of the Confirmation Statement, with Companies House annually.

To submit forms to Companies House to notify of any changes in the particulars of company director(s) or company secretary.

Notify Companies House if you change your registered company address.

You must always act in the interests of the company shareholders. This means that the directors cannot enrich themselves in a way that damages the company.

UK Limited Company- Registration Details

You can register your company online and it takes approximately 4 hours to complete. The information you will require is your company name, Directors’ name, address, date of birth, the details of the Persons with Significant Control.

You will also require a Memorandum and Articles of Association.

Memorandum and articles of association

When you register your company you need:

a ‘memorandum of association’ - a legal statement signed by all initial shareholders agreeing to form the company

‘articles of association’ - written rules about running the company agreed by the shareholders, directors and the company secretary

You can use our standard articles and memorandum of association while you complete the company formation process through our website.

UK Limited Company- Taking Money Out

If you want the company to pay you a salary, expenses or benefits, you must register the company as an employer with HM Revenue and Customs

The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HMRC, along with employers’ National Insurance contributions.

If you or one of your employees makes personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.

Dividends

A dividend is a payment a company can make to shareholders if it has made enough profit.

You can’t count dividends as business costs when you work out your Corporation Tax.

Your company mustn’t pay out more in dividends than its available profits from current and previous financial years.

You must usually pay dividends to all shareholders.

To pay a dividend, you must:

hold a directors’ meeting to ‘declare’ the dividend

keep minutes of the meeting, even if you’re the only director

Dividend paperwork

For each dividend payment the company makes, you must write up a dividend voucher showing the:

date

company name

names of the shareholders being paid a dividend

amount of the dividend

You must give a copy of the voucher to recipients of the dividend and keep a copy for your company’s records.

Tax on dividends

Your company doesn’t need to pay tax on dividend payments. But shareholders may have to pay Income Tax if they’re over £5,000.

For dividends above £5000, one will pay at a basic rate of 7.5% for dividend up to £32,000 and a higher rate for dividend up to £43,000.

Corporation Tax

You must pay Corporation Tax on profits from doing business as:

a limited company

any foreign company with a UK branch or office

a club, co-operative or other unincorporated association, eg a community group or sports club

You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.

Register for Corporation Tax when you start doing business or restart a dormant business.

Keep accounting records and prepare a Company Tax Return to work out how much Corporation Tax to pay.

Pay Corporation Tax or report if you have nothing to pay by your deadline - this is usually 9 months and 1 day after the end of your ‘accounting period’.

File your Company Tax Return by your deadline - this is usually 12 months after the end of your accounting period.

Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.

Profits you pay on Corporation Tax

Taxable profits for Corporation Tax include the money your company or association makes from:

doing business (‘trading profits’)

investments

selling assets for more than they cost (‘chargeable gains’)

If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.

If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.

Making Tax Digital

At the March 2015 Budget, the government had set out the vision for a transformed method of paying tax and the tax return.

Making Tax Digital sets out how this bold vision for the future of the tax system will be achieved by 2020 through the transformation of HM Revenue and Customs (HMRC) into one of the most digitally-advanced tax administrations in the world.

Making Tax Digital will represent significant changes to the way in which the tax system will operate. These changes will put customers at the heart of what HMRC does going forward. The government has been introducing them gradually between 2018 and 2020, because they know how important it is to get them right and to give individuals and businesses time to adapt.

Easing the transition to digital

A number of changes are being made to the proposed design to ease the transition to a digital tax system.

Some of the key changes include:

removing more of the smallest businesses from the requirement to keep digital records and update quarterly. We will exempt all unincorporated businesses and landlords with a turnover under £10,000 a year

referring the start of Making Tax Digital for some other small businesses, giving them extra time to get used to digital record keeping and quarterly updating

exempting digitally excluded businesses from digital record keeping and quarterly updating

ensuring flexibility for how businesses manage their accounts and introducing simplifications, for example extending cash basis accounting to more businesses

The digital tax system tries to keep the system as easy and simple as possible.

HOW TO DISSOLVE A UK LIMITED COMPANY

A company usually need to have the agreement of their company’s directors and shareholders to close a limited company. The way to close the company depends on whether it can pay its bills or not. Striking off the company is usually the cheapest way to close it. The Company don’t have to close if it’s no longer trading, they can let it become ‘dormant’ for tax as long as it’s not. Company can keep a limited company dormant for as long as they want.

The best method applicable to closing down a limited company depends on whether that company is solvent or insolvent (i.e. whether it still has outstanding debts).

If you company can pay its bills (‘solvent’)

I. Apply to get the company struck off the Register of Companies.

You can close down your limited company by getting it ‘struck off’ the Companies Register, but only if it:

hasn’t traded or sold off any stock in the last 3 months

hasn’t changed names in the last 3 months

isn’t threatened with liquidation

has no agreements with creditors, eg a Company Voluntary Arrangement (CVA)

If your company doesn’t meet these conditions, you’ll have to voluntarily liquidate your company instead.

When you apply to ‘strike off’ your company, you have certain responsibilities to close down your business properly.

II. Start a members’ voluntary liquidation

Striking off the company is usually the cheapest way to close it.

The company can’t pay its bills (‘insolvent’)

When your company is insolvent, the interests of the people your company owes money to (its creditors) legally come before those of the directors or shareholders.

You must use the creditors’ voluntary liquidation process.

Your company might be forced into compulsory liquidation if you don’t pay creditors.

You may be able to avoid liquidation by applying for a Company Voluntary Arrangement.

You can also allow your company to be dormant for tax as long as it’s not-

carrying on business activity

trading

receiving income