Limited companies

Advantages of a limited company

Using a limited company to run your business has the following main advantages:

• There is flexibility in how the profits are paid to the owners of the business, which can lead to savings in tax and National Insurance.  A self-employed individual earning £20,000 per year can expect to save around £1,000 per year in tax and National Insurance, and these savings increase as profit increases.
• The owners of the company have limited liability (hence the name).  This means that should the company run into difficulties and incur large debts, with a few exceptions the owners of the company cannot be held personally liable for those debts.
• It can create a favourable business impression. It shows potential business contacts that you have gone to the trouble of going through an incorporation procedure that results in ongoing responsibilities, and that you are being open about who is involved in the business and its financial position.  It can also suggest that your business is larger than it really is.

If you have not considered running your business through a small company before, and would like a discussion about the advantages and disadvantages of doing so, then please give us a call on 01273 203003 or us to arrange a free consultation.
 

Company formation

To start up a new company, the main options are to complete all the paperwork yourself at Companies House, use an internet formation-only service, or use a firm of accountants like us.  Whilst we are unlikely to be the cheapest option, we think that your company should get off to the best possible start, and so our company formation service includes:

• Advice on whether a limited company is a good option for you.
• Advice on choosing a company name, company secretary, directors and shareholdings.
• A quick formation service (we can usually let you know your company registration number within a day or 2).
• An optional introduction to a Brighton-based bank manager, to help get a company bank account opened quickly and smoothly.
• Advice on extracting profits from the company in the way that saves the most tax.
• Guidance on day-to-day running of the company, in order to stay on the right side of the tax man.
• Help with the requirement to register the company for corporation tax.
• Free enrolment on a scheme to protect the company from being hijacked by fraudsters.

Ongoing company services

For existing small companies, we offer all the ongoing support you need, such as:

• Provision of registered office and boardroom facilities
• Help with changes to the company's share capital or constitution
• Help with company record keeping requirements
• Help with all your Companies House filing obligations.

Frequently asked questions about limited companies

Who can be a company secretary and company director? Show answerHide answer
Unless the company is a plc, almost anyone can be appointed - no special skills or qualifications are needed.

The company secretary is mainly an administrative role, which carries little power or responsibility.  A trusted friend or family member is usually a good choice.  From April 2008, it is no longer be necessary for a private company to have a company secretary.

Directors have full power to manage the company and enter it into contracts, so they should be chosen carefully.  Equally, a company director can in certain circumstances be held personally responsible for various failings of the company, so it is not a role to be undertaken lightly.

What tax does a company pay, and when? Show answerHide answer
A small company pays corporation tax at the rate of 21% of company profits (before dividends). It is due once a year, 9 months after the end of the accounting period. If your accounts cover more than one year, they are divided into one period of 12 months and a second period to cover what’s left. A payment is then needed 9 months after the end of each sub-period. Interest is charged on any tax paid late. It is calculated on a daily basis, at an annual rate of around 5%. For details on how to pay, see here.

Got another question?  Email us and we'll try to help.