One of the options when starting a business is to form a limited company. Although you will have to pay to register the company and the requirements for HM Revenue & Customs and Companies House are slightly more complex, there are numerous advantages.
A private limited company may be set up and directors appointed to run it. The company must be registered, also known as incorporation, with Companies House and HMRC must be informed.
A business is officially a limited company once it has been registered with Companies House. This can be done by post, online or through an agent. Once the registration process is complete, a Certificate of Incorporation will be issued to the company, detailing the company number and the date that the company formed. There are specific requirements which must be fulfilled for Companies House and if the requirements aren’t met, a penalty may be issued. Annual accounts must be prepared and submitted to Companies House for each financial year. A Company Tax Return has to be completed and submitted to HMRC each year and any Corporation Tax which is due must be paid in a timely manner.
When you inform HMRC that you have formed a limited company, you will have to provide the relevant details. This will include the date that the company was formed, the company name and registered number and also the business address. HMRC will need to know the type of business and the date that you will prepare annual accounts to. The Unique Taxpayer Reference of your company will be sent to the registered office address shortly after the company is incorporated. HMRC will issue a letter which explains how to register for an online account for Corporation Tax and Company Tax Returns and also what information HMRC will need.
Accounts have to be prepared and sent to Companies House and HMRC each year. If this is your first time preparing accounts, it may be advisable to seek professional guidance to ensure they are completed correctly. Records of all business income and expenditure must be kept so that accurate accounts may be completed. Business records for Corporation Tax must be kept for six years following the end of an accounting period. The type of business and size will determine the precise records which need to be kept by your company. Failure to maintain the correct business records for the right amount of time will result in a penalty.
A company tax return must be filed every year after each accounting period. A form CT600 which is completed in full, a copy of your company accounts and tax computations have to be sent in together to HMRC. You must still file a company tax return even if the company failed to make a profit during the accounting period. Up to 12 months may be covered on each company tax return. Following the end of your accounting period, HMRC will send you a notice to file a company tax return, form CT603. The company tax return, along with company accounts and computations must be submitted by the statutory filing date, usually 12 months following the accounting period end. Late filing of the company tax return will result in a penalty being issued to your company. However, if the notice to file is sent to you more than one year following the accounting period end, you will have three months to submit the company tax return.
If your company has profits of less than £1.5 million, the deadline for payment of Corporation Tax is nine months and one day following the end of the accounting period, usually three months before the filing deadline for a company tax return. To ensure that you comply with HMRC and Companies House, seek professional guidance.
For further information about Limited Companies see our guide here.
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