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limited company

10 advantages of a limited company

Although the sole trader route, which is commonly referred to as being self employed, is the most popular way of running a business in the UK, there are significant advantages of operating as a limited company.

Here, we highlight 10 of the biggest benefits a limited company gives you over working as self-employed;
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When you set up a limited company, your annual profits will be subject to Corporation Tax.

Dealing with your corporation tax issues is one of your accountant’s key tasks. However, it is ultimately the directors of a limited who are responsible for ensuring that a company’s tax affairs are in order.

As a director of a limited company, you therefore need to make sure that your company’s corporation tax liability is accurate, your corporation tax return (form CT600) is filed with HMRC on time, and that you pay the corporation tax to HMRC when it falls due.

If you are setting up a limited company for the first time, here is a handy overview of how to comply with the corporation tax rules for UK companies.
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One of the first, and most important decisions you make when you set up a new business is to decide what type of legal structure you should work under.
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When a company goes into liquidation, it’s generally understood that employees are entitled to redundancy pay. But what about the company directors themselves? Ultimately it is their business that has failed, and their livelihood that has collapsed.

Unbeknown to many directors, the government does provide limited company directors with statutory entitlements, such as redundancy pay, in a number of situations where a limited company has become insolvent and entered liquidation.

With some 80,000 personal insolvencies a year and around 14,000 companies becoming insolvent annually, it’s an issue that many business owners can find themselves facing, but a lack of understanding about statutory entitlements means many limited company directors end up missing out.

We’ve therefore asked Gary Addison, an experienced insolvency and redundancy expert, to explain more about what statutory entitlements actually are, and how they apply to company directors. Continue…

The inspiration to start a business can come anywhere at any time: in the pub, in the shower, in the supermarket, walking the dog. How many times has someone you know announced they’ve had a great business idea? And how many of those eureka moments ended up getting no further than a few notes on a napkin?

Why was this? Too much hard work involved? Concerns over starting a business being too risky? Worries about it needing too much commitment?

But those aren’t barriers to every business idea taking off; some ideas do make it from conceptualisation to conclusion. The difference? Dedication and passion. And perhaps necessity. Continue…

Making the decision to go it alone and leave the relative security of life as a PAYE employee is a big one, but it can pay dividends (quite literally) when it comes to your potential earning power.

If you’re thinking about whether becoming a contractor could be the right career move for you, we have put together this guide to cover the key things you need to know before you make the move.

If you want to become a contractor, the good news is that there are plenty of different roles available, with everything from IT specialists and engineers, to management consultants and even locum doctors engaged on this basis.

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Aside from the sole trader route, the limited liability company is the most popular business structure in the UK.

With a limited company, the liability of company directors is ‘limited’ in that the company’s finances are separate from the personal finances of the business owner. This is not the case for those who run their business as a sole trader (self employed).

Limited company shareholders are not responsible for any debts run up by the business, although banks may ask company directors to provide loan guarantees for commercial loans or credit taken out in the company’s name.
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Since 6th April 2016, nearly all UK companies have been required to maintain a register of Persons with Significant Control (also known as a “PSC register”).

The PSC register obligations were introduced as part of the Small Business Enterprise and Employment Act 2015. The government’s intention was to enhance corporate transparency where complicated ownership structures can sometimes make it difficult to tell who owns and controls companies.

However, even small limited companies with very simple structures are required to maintain a PSC register. And, from 30th June 2016, companies need to file this information with Companies House as part of the new Confirmation Statement (which replaces the Annual Return from this date).

This guide explains to small business owners what a Person with Significant Control is, how to produce a PSC register and what companies need to do to stay on the right side of the law.

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All UK limited companies, large and small, have been required to file an Annual Return (AR01) with Companies House at a set point each year.

From 30th June 2016, as part of the Small Business Enterprise and Employment Act 2015, the Annual Return is replaced with a new document called a ‘Confirmation Statement’.

Like its predecessor the Annual Return, the Confirmation Statement is a snapshot of information about a company which must be provided once per year. Most of the information provided is placed on the public record by Companies House.

Here’s everything that limited company directors need to know about the new Confirmation Statement; Continue…

If you are considering setting up your own limited company, the prospect of ‘dealing with the authorities’ may seem daunting. In reality, the company formation process is very simple – whether you apply yourself, or use a registration agent to set up the company on your behalf.
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From 6 April 2016, the way dividend income is taxed will change significantly. The changes will affect hundreds of thousands of small business owners, many of whom will see a big jump in the amount of tax they will have to pay.

At present, company dividends are treated as ‘tax paid’ in the hands of shareholders. However, from April 2016 the tax treatment of dividends will be altered dramatically, and as you can imagine, this isn’t going to result in limited company directors paying less tax! Continue…

When you start a business with someone else, it’s always a good idea to lay down some rules on important issues, such as; how you will run the company, your respective responsibilities and what happens if someone wants to leave the business. Agreeing on how you will handle these, and other important matters, will save a lot of anguish down the line.

If you are going into business with other individuals working under a partnership structure, you should do this with a Partnership Agreement. If you are setting up a limited company, you will a need to record these in a Shareholder’s Agreement.

This guide explains what a Shareholder’s Agreement does, who should get one and what should be included in the document.
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Every limited company must submit their accounts to Companies House each financial year. In this article, we look at how you work out the deadline for your first annual accounts.

If you are a limited company director, one of your legal obligations is to ensure that your company’s annual accounts are submitted to Companies House accurately and on time.
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The type of structure you use will depend on a number of factors unique to the business you want to start. In this article, we look at the main structures – sole trader, limited company, partnership and LLP and highlight the pros and cons of using each one.
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If two or more people wish to go into business together, and don’t want to set up a limited company, a partnership offers a simple way to get started. It is similar in many ways to going the sole trader route for an individual.
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A dormant company is one that doesn’t trade and has no accounting transactions.

There are two main situations where owning a dormant limited company can be useful for start-ups and small business owners;
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ByteStart has teamed up with Crunch Accounting to bring you a very special offer.
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When you form a new limited company, one of the three documents you need to submit is the Articles of Association.

The other forms you need to submit to Companies House together with the Articles of Association are; Form IN01 and the Company Memorandum of Association. You can read more about what information is provided by these forms in our dedicated article here.
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One of the first tasks you will have when starting up your business will be to decide whether to set up a new limited company, or become self-employed. If you choose to go self employed, this could be either as a sole trader, or as a partner in a partnership.

The different business structures each have their own advantages and disadvantages, so it’s vital you understand what each offers you. Working out which option best suits you, and your new business, can take a little time but it is an important decision, and one that can have major ramifications over the years ahead, so you do want to choose the business structure that best suits your circumstances.

Here we look at some of the differences between working as self employed and setting up a limited company;
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The Memorandum of Association is one of the three documents you need to complete when registering a new limited company. The other two items you need to submit are Form IN01 and the Articles of Association.
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What legal requirements do limited companies have?

May 14, 2013

If you are thinking of forming a new limited company, you should be aware of the legal requirements you have to meet as a limited company director, on behalf of the company.

The different ways to set up a company

March 18, 2013

If you want to set up a company, you can form it yourself via Companies House, use a formations agent, or an accountant will typically be more than happy to take care of the incorporation process on your behalf.

What is an Annual Return form used for?

January 21, 2013

Each year, all UK registered companies are required by law to complete and submit an Annual Return to Companies House. This form provides a snapshot of relevant company information at the time of submission.

What is a private limited company?

October 22, 2012

Over 1.3 million businesses currently operate as private limited companies in the UK, compared to nearly 3 million sole traders, and around 450,000 partnerships.

Record number of private businesses in the UK

October 17, 2012

Figures released by the Department of BIS today show that there are now more private sector businesses in the UK than ever before – 4.8 million of them at the start of the year.

What types of limited company are there?

October 15, 2012

Incorporation is the process of creating a company structure – a new legal entity which is distinct from the individuals or shareholders who formed it.

Forming a limited company – overview of Form IN01

September 3, 2012

To form a limited company in the UK, you must complete Form IN01. In this article, we look at the information Form IN01 captures, and how this information is used by Companies House.

What is the registered office of a limited company?

August 30, 2012

When you set up a limited company, you need to provide Companies House with a registered office address. This must be a real physical address, where paperwork can be delivered, and not a PO box.

Small businesses could save billions by going limited

June 27, 2012

A professional services site says that small businesses could be ‘wasting’ over £4bn each year in unnecessary taxes by setting up as sole traders and partnerships rather than taking the limited company route.

Do you need to have a company secretary, and what duties do they fulfill?

February 13, 2012

Unless the Articles of Association specify otherwise, a private company does not need to have a company secretary. However, the duties of a company secretary still need to be fulfilled regardless of whether someone is formally appointed. A public company, on the other hand, must have a formal company secretary appointed.

ByteStart’s Start-Up Guide – Part 3 – Which business structure is best for you?

October 11, 2011

Most small businesses set up as either sole traders, or limited companies. In this section of ByteStart’s Start-Up Guide, we look at the most commonly used business structures in the UK.

Contractors and freelancers – paying yourself via a limited company

October 11, 2011

If you are contracting or freelancing via your own limited company, how you draw down income from your company will depend on several factors, the main one being your IR35 status.

Umbrella companies vs. limited companies for contractors

October 11, 2011

One of the first things a new contractor has to decide is whether to contract via a limited company or an umbrella company. What are the advantages and disadvantages of each option?

IT Contractors – how to avoid late paying clients

October 11, 2011

There has been much talk recently about freelancers and contractors struggling to get their invoices paid by the agencies or end clients. With the credit crunch hitting cash flows hard, the bigger companies are often guilty of extending credit terms without your say so. If, firstly, the client delays in paying the agency and then […]

Limited companies – what is a registered office?

September 27, 2011

By law, every company in the UK must have a registered office – this is a physical address in the UK where the company can receive documents from Companies House and other organisations.

What does a limited company secretary do?

September 27, 2011

The role of limited company secretary is essentially an administrative one, but can involve a number of important responsibilities depending on the wishes of the company’s directors.