Limited Company Guidelines

What does running a limited company involve?

A limited company will have to be registered with Companies House to ensure that the owner has limited liability. A private limited company needs to issue just £1 of shares to begin trading, must have at least one director and may not be listed on the stock exchange unlike a public limited company.

Effectively the limited company has a life of its own. The limited company will enter into contracts and is responsible for its own debt, which means that contracting through a limited company is often considered the safest way in which to work.
The limited company’s finances are distinct from the personal finances of its owner. Shareholders in limited companies are not responsible for company debts; however directors may guarantee loans or credit granted to the company against their own assets.
If you are the shareholder and director, you will have total control over the funds that pass through the limited company. This means you control how much you pay yourself as salary, dividends or legitimate expenses.
Another point to consider is that often your clients and agents will prefer to deal with limited companies rather than sole traders.
To trade as a limited company, the limited company must be registered with Companies House. The limited company is required to file Annual Accounts and an Annual Return each year to update Companies House with the limited company’s basic details.
HMRC must be informed of the company’s profits and taxable income every financial year by way of a full set of accounts and an annual HMRC corporation tax return. These must also be completed annually and tax paid accordingly by the company. Anyone employed by the limited company must pay income tax and National Insurance contributions on their salary.

Limited Company	PAYE Umbrella Company	Sole Trader
Advantages	Advantages	Advantages
FREE to start up and close down company	No Paperwork	Low accountancy fees
Could have a higher net return than umbrella company (dependent on your IR35 status)	Convenient short term solution	Advice from a specialist contractor’s accountant, established 1998
Take home pay advice by email and SMS on the same day your company is paid	Usually covered by Professional Indemnity	Low administration
A simple monthly fee with no minimum charge	No problems with IR35	Easy to set up
Advice from a specialist contractor’s accountant, established 1998	Quick ‘take home’ payments	No business bank account required
You have options, flexibility and control		No need to provide Companies House with information
Flexibility with expense claims compared with umbrella company		Flexibility with expense claims compared with umbrella company
		Higher net return than umbrella company
Considerations	Considerations	Considerations
Higher accountancy fees than sole traders due to increased work	Low net income compared with other options	Unlimited personal liability for business debts *
Risk of IR35 investigation IF you choose to work ‘Outside IR35’	No real options	Some recruitment agencies will not deal with sole traders for legal reasons

* The liability issue is an obvious reason why contractors often prefer to set up a limited company, but there are other advantages that can be overlooked. Giving your business ‘limited status’ can imply that your business is expanding and is a more stable partner to engage with.

Once trading has begun

Your Company is legally obliged to maintain books and records. If done yourself, this can take up a lot of your time and can tend to slip to the bottom of the pile in terms of priority, therefore putting you at risk of HMRC fines.

Churchill Knight & Associates Ltd differs from other accountants as we offer bespoke accountancy services designed to free up your time and allow you to concentrate on delivering your contracts.

What option would be best for you if you engaged Churchill Knight & Associates Ltd?

Set up	Particulars	Quarterly	Yearly	Ongoing
Your Limited Company with Companies House	Free unlimited telephone and e-mail advice	Produce and submit VAT return quarterly (if VAT registered)	Produce and provide form P60 to all employees	Bookkeeping
Assist with set up of your company’s bank account	Run payroll and provide payslips	Produce PAYE payment advice	Produce and submit form P14 to HMRC
Your company’s PAYE scheme	Produce and send you a tax computation every time your company receives income	Send an email/SMS confirmation of your VAT (if VAT registered) and PAYE bill including all relevant information	Produce and submit abbreviated company accounts to Companies House	Deal with HMRC
Register your company for VAT and Flat Rate Scheme if requested	Advise you by SMS/Email of the maximum amount you could withdraw after tax		Produce dividend vouchers where appropriate for all your company’s shareholders	Deal with National Statistics enquiries
Complete and submit form CT41G to HMRC	Notify Companies House of any changes regarding company directors		Produce forms P11D and submit to HMRC and employees
	Mortgage and letting references		Advise you to pay Class 1A National Insurance where due
	Produce and submit form P45 to HMRC and employees		Produce and submit form CT600 corporation tax return to HMRC
	Free accountancy references		Produce and submit full company accounts to HMRC
	Free Personal Tax Planning service		Produce and submit form P35 to HMRC
	Produce all paperwork necessary for an HSMP (Highly Skilled Migrant Programme) visa application		Complete and submit Annual Return form 363 to Companies House

If you are thinking about registering as a limited company and would like to know more, contact Churchill Knight & Associates Ltd and speak to one of our consultants.

Churchill Knight and Associates Ltd

New Business enquiries: 01707 871610

Existing clients call us on 01707 871610

Free business set up and free to close down.