Running a Limited Company
You may have seen comments like “running a limited company means you have extra administration to do”. But just how much extra?
- Dealing with Companies House
- registering the new company can be done quickly and cheaply on-line – a one-off job
- filing your annual return – again this can be done on-line and will take most businesses less than an hour to complete. There is an annual fee, which is currently £15. This can be paid by credit card or Paypal.
- filing an abbreviated copy of your annual accounts. This has to be in a standard format. You can either ask your accountant to file the accounts or you can do it yourself using the software provided by Companies House.
- notifying changes of address, or various other changes such as a new director. This is an occasional task unlikely to cause much trouble for a very small business.
- Dealing with HMRC – the taxman
- registering to pay Corporation Tax. HMRC send you a form to return within 3 months of setting up the business.
- maintaining records and accounts which can prove that you are paying the right amount of tax. This is by far the biggest job, and you can get into lots of trouble if you don’t do it properly. Your annual accounts have to be produced in a standard form and filed with HMRC. Most small businesses use an accountancy firm to do this for them, but you need to have recorded all the financial transactions which go on through the year.
- registering as an employer. Even if you are a one-person business, the company is your employer and you must administer a payroll if you draw a salary from the company.
- running a payroll and collecting PAYE (income tax and national insurance contributions). You have to remit the taxes collected to HMRC every month.
- recording and accounting for employee expenses. There are strict rules on which expenses are allowable and which have to be treated as extra taxable income for the employee. You have to send in an annual return.
- registering for VAT, if your turnover exceeds the threshold level – currently £73,000.
- maintaining VAT records. This will be part of your accounting system, but you have to report the figures to HMRC and send them the VAT you have collected four times a year.
The good news is that most of this is done on-line. This is quicker both for you and for the government, and it should reduce the number of errors made in copying figures from one place to another.