Running your limited company should never be a headache. Once created the annual requirements are very simple. We file an annual return and annual accounts at Companies House and your accounts and tax return are sent to HM Revenue and Customs. A quarterly email means that you are always aware of all filing deadlines and the dates that everything is taken care of.
Whether you are just starting out, or considering transferring your business to a limited company, there are many factors to consider. There is certainly no right answer for every business. We strongly recommend that you take professional advice should you be considering whether to trade as a limited company or as self employed (sole trader or partnership).
Limited liability
A major advantage of operating your business as a limited company is that your personal assets are generally not at risk. A shareholder can only be liable for the amount invested in their shares. Assuming there are no irregularities a director will only be liable for amounts, if any, that they have personally guaranteed. Many business people feel a greater sense of control when operating their business bank accounts, assets and liabilities within a limited company.
External perception
In return for limited liability, a company must publish certain financial information by filing accounts at Companies House. Although these accounts only show balance sheet items (small businesses do not have to disclose turnover, costs or profits) credit rating agencies and external stakeholders can take some assurance that the business is sound by reviewing the publicly available information. Many banks, suppliers and customers are more comfortable when dealing with a limited company compared to a sole trader.
Ownership of business
A limited company is owned by its shareholder(s) and managed by its director(s). For many small businesses the shareholder(s) and director(s) are the same people. A limited company offers flexibility should you wish to take external investment from new shareholders. Alternatively you may wish to appoint a director without offering shares in the business.
Taxation
Checking the amount of tax you will pay as a limited company or sole trader is important, but has never been a single deciding factor in choosing the way a business is operated. Recent budget changes mean that the amount of tax paid by identical sole trader and limited company businesses is similar. A tax saving when operating a limited company does still exist and still exceeds any additional costs for most small businesses.
There are many important tax considerations other than the straight forward amount of tax paid year on year. These include taxes (or tax savings) on transferring from sole trader to company; loss relief available to sole traders; significant differences in taxes relating to cars and pensions.
Disincorporation
Transferring from a limited company back to a sole trader or partnership is usually more difficult and more expensive in tax than becoming a limited company. You should not begin to trade as a limited company, or convert to one, with an expectation of being able to revert back without significant additional costs.
Changes of details
If you have made or are proposing any changes in your company details then let us know by email. We will advise on any consequences of your changes and carry out the change efficiently and promptly. Examples of changes that you may need to make:
- Change of company name.
- Change of registered office.
- Appointment, change and resignation of director / secretary.
- Change of accounting reference date.
- Declaration of satisfaction of mortgage.