Before delving into what you should be aware of, first, a definition of a limited company:
A limited company is a self-contained entity that you can use to structure and
run your business. Limited companies must use Limited or Ltd as part of their
Bearing the above definition in mind, below is a list of what must be put in place when starting/running a limited company:
1. Register (Incorporate) with Companies House
The limited company needs to be registered with companies house before it is officially recognised as a limited company.
Registration can be done:
– online. More details here: https://ewf.companieshouse.gov.uk//runpage?page=welcome
– by post using form IN01. Details here: http://www.companieshouse.gov.uk/infoAndGuide/companyRegistrationPaper.shtml
– via an agent, for example, through your accountant.
Note that If your business works in the construction industry or does construction-related work,
it may need to register with HMRC as a contractor or sub-contractor under CIS. Go to http://www.hmrc.gov.uk/cis
2. Inform HMRC
You must tell HMRC with three months
– the date of incorporation
– company name and registration number
– main address
– the kind of business
– the date the accounts will be made up to
– if the company is part of a group or if it is taken over from previous owners.
3. Preparation of Financial Accounts
Once a year, annual statutory accounts must be sent to HMRC and Companies
House. Accounts must follow certain Generally Accepted Accounting Principles
(GAAP). GAAP is a set of guidelines covering financial reporting. It is there so
all reports follow a consistent format. Accounts must also give a true and fair
view of the state of the company’s financial affairs.
4. Record Keeping
Full record of all business income and expenditure must be kept. For
Corporation Tax, records must be kept for six years from the end of the related
accounting period. More details are on http://www.hmrc.gov.uk/factsheet/record-
keeping.pdf and http://www.hmrc.gov.uk/ct/managing/record-keeping.htm.
5. Company Tax Return
Limited companies must send (also known as file) company tax returns
following every accounting period. Accounts are filed using form CT600.
Reurns must be filed whether or not the company made a profit and they must
not cover more than 12 months. A penalty is charged if returns are filed late
even if Corporation Tax is not owed.
6. Paying Corporation Tax
Corporation Tax is paid electronically. The actual payment deadline varies
in relation to the profit levels.
If profits are UK£1.5 million or less (2012/2013),
the deadline is nine months and one day after the end of the Corporation Tax
accounting period (for example if the accounting ends on 31 Dec, the
deadline for payment is 1 Oct the following year).
Companies with annual profits greater than UK£1.5 million (2012/2013) are
normally expected to pay their corporation Tax in instalments for obvious reasons.
7. Directors’ responsibilities
Directors must submit an annual Self Assessment income tax return unless the
company is a non-profit making company and the directors receive no
payments or benefits.