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Forming a limited company can seem like a complex task, with so many regulations and obligations to adhere to. Setting up as a sole trader is relatively simple, with just one person responsible for the business and the administration, which is a straight forward requirement. recognisedHowever, forming a limited company has many benefits and it is possible to outsource many duties to a tax professional, like an accountant. A limited company needs to have company officers consisting of company directors and a company secretary. The details of the company officers will be set out in the formally agreed articles of association.

A limited company must have company officers appointed at all times, with details of names and addresses to be shown on all registration documentation. If company officers are changed, the details must be submitted to Companies House immediately. The requirements for company officers differ slightly for public and private limited companies. A private limited company only needs one company director and doesn’t have a legal requirement to appoint a company secretary. A public limited company has to have two or more company directors and a suitably qualified company secretary.

Company directors have legal obligations to a limited company according to The Companies Act 2006. Company directors must be compliant with the articles of association and abide by the law at all times. A company director must act in the best interests of the company at all times. Although formal qualifications aren’t required to be a company director, there are some prohibitions; a company director must be over the age of 16 and cannot be an undischarged bankrupt. If a person has been disqualified by court, they can’t become a company director.

There are responsibilities to be upheld by company directors and failure to comply with legislation could result in a fine or even being struck off the register. Specified documents have to be filed by the company directors with Companies House in a timely manner. Company directors are responsible for annual accounts being submitted and the annual return being completed. If there are any changes to the company directors, company secretary or changes to the registered office, Companies House must be notified immediately.

A company secretary carries out duties which are generally outlined in an employment contract. Although a company secretary for a private limited company doesn’t need any formal qualifications, this would change if the company became a public limited company. There are specific duties which are normally carried out by a company secretary including the maintenance of statutory registers, the filing of statutory forms in a timely manner and the issuing of notice of meetings to auditors and members. Other duties include sending copies of agreements and resolutions to the Registrar, preparing and submitting a copy of the company accounts to each member of the company and keeping minutes of the meetings.

The company officers have a range of duties to attend to and a legal obligation to the company. Although many of the duties can be outsourced, it is the responsibility of the company directors to ensure that all documents are filed in a timely manner. Failure to do so may result in fines being issued or maybe even prosecution.

Although setting up a business as a sole trader may seem more straightforward, there are advantages to forming a limited company. A private limited company doesn’t have to abide by as many regulations as a public limited company but isn’t able to offer shares of the business to the public. It is advisable to consult a professional before forming a limited company.

 

 

About The Author

Kara Copple

An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.

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