Running a limited company isn’t just about running a business, it’s about running it properly. Directors have legal responsibilities to ensure the company operates compliantly, keeps accurate records, and meets its reporting and tax obligations. Here’s a simple overview of what’s involved in running a limited company successfully and staying compliant.
Getting started
Every company should be set up with a clear structure and purpose. You’ll need to register with Companies House and receive a Certificate of Incorporation confirming the company name, number, and registered office. You should also register the company with HMRC for Corporation Tax within three months of starting to trade.
Managing the money
A business bank account must be opened in the company’s name and used for all income and expenditure relating to the business. Where possible, always try to keep company and personal finances separate. You will need to keep accurate bookkeeping records for sales, purchases, and expenses as this is a legal requirement. We recommend using an online bookkeeping system such as Xero to keep things organised and compliant.
Directors and governance
Company directors are legally responsible for ensuring accounts are accurate, tax is paid on time, and the company acts in line with its Articles of Association. Even if a bookkeeper or accountant manages the records, directors remain accountable for compliance and filings.
Accounting and reporting
Each year, the company must prepare annual accounts and file them with Companies House. You’ll also need to submit a Corporation Tax return (CT600) to HMRC and pay any Corporation Tax due — normally nine months and one day after your year end. The level of detail in your accounts depends on your company’s size, with smaller companies qualifying for simplified filing formats. You can read further about types of company’s here.
Pay and payroll
If the company pays directors or staff, it must register for PAYE with HMRC, issue payslips, and report through Real Time Information (RTI) each month. Director/shareholders are usually paid a combination of salary and dividends. We can manage payroll processing and ensure your tax position is efficient and compliant.
Dividends and personal tax
Dividends can only be paid from post-tax profits for companies limited by shares and must be supported by a board minute and dividend voucher. Dividends are not subject to National Insurance, but directors receiving them must complete a Self-Assessment tax return each year. You may wish to read our Dividend Procedure for further information.
Benefits and expenses
If the company provides benefits such as company cars, medical insurance, or reimbursed personal expenses, these must be reported to HMRC on a P11D form, and Class 1A National Insurance may apply.
IR35 and off-payroll working
If you provide services through your company to another organisation, you may fall under IR35 (off-payroll working) rules. These determine whether income should be taxed as employment income rather than dividends. We can review your contracts and advise on compliance.
VAT
If the company’s taxable sales exceed £90,000 in any 12-month period, you must register for VAT. Voluntary registration may also be beneficial if your suppliers charge VAT that you can reclaim. We can manage your VAT registration and file Making Tax Digital (MTD) compliant VAT returns.
Insurance and risk
Companies should review their insurance needs regularly. Common policies include employers’ liability, public liability, and professional indemnity to protect against financial or legal risks.
Transparency and communication
All official company communications such as letters, invoices, websites, and emails must clearly show the company name, registered number, and registered office address.
Use of home as office
If the company uses your home for business then it may be suitable for you to make a use of home as office claim. If this is the case then you should have a written agreement in place between you and the company.
HMRC online services
You should register with HMRC Online Services. You can do this here.
If you would like to discuss your company’s financial setup or ongoing compliance in more detail, please feel free to contact us or book a free online meeting.