Companies House and HMRC Explained<\/strong><\/span><\/h4>\nCompanies House<\/strong><\/span> is the Government Department that incorporate and dissolve limited companies. They register company information and make it available to the public. They are completely separate to HMRC<\/strong><\/span>, who are the UK\u2019s tax, payments and customs authority. Their purpose is to collect the money that pays for the UK\u2019s public services and help families and individuals with targeted financial support.<\/em><\/p>\nCompanies House and HMRC don\u2019t \u201ctalk\u201d to each other. If you change things about your company at Companies House you have to tell HMRC. That\u2019s the same when you file accounts; you have to file accounts with both Government Departments. HMRC will also want corporation tax returns from you as well.<\/em><\/p>\nShare Capital<\/strong><\/span><\/h4>\nThe ownership of a company is determined by way of the owner buying shares in that company. The payment for the shares is recorded as share capital in the accounts of the company. Simply put you, as the owner, buy shares in the company.<\/p>\n
In terms of the amount and number of shares that you buy, the key is to keep it simple. There is usually no need to set up a complicated share structure. In fact you can set up a company with one share at \u00a31 each and be the sole shareholder.<\/p>\n
Do remember that for each share that is allocated to you as a shareholder you must pay the limited company (separate legal entity) for the value of the share.<\/p>\n
So avoid setting the company up with you buying 1,000,000 shares of \u00a31 each as you\u2019ll be expected to pay \u00a31million to the company!<\/p>\n
Director<\/strong><\/span><\/h4>\nYou do need to appoint at least one director for the limited company. The director can also be a shareholder and it is perfectly acceptable to have you as the only director and sole shareholder. Again, keep it simple.<\/p>\n
Company Secretary<\/strong><\/span><\/h4>\nLong gone are the days when a company must have a company secretary with this requirement being removed from Company Law many years ago.<\/p>\n
The company secretarial duties for a \u2018one person\u2019 limited company are straight forward and in general there is no need to pay for secretarial services that are offered by many formation houses. They are a nice to have but absolutely not necessary and you\u2019ll be better off spending your money elsewhere.<\/p>\n
Business Bank Account<\/strong><\/span><\/h4>\nAlthough there is no specific legal requirement to do so, the company will need a separate business bank account in the name of the company.<\/p>\n
Legal Entity<\/strong><\/span><\/h4>\nEven though you may own the company you need to think of it as being a separate legal entity with its own business bank account. Any financial dealings that you have with the company, such as putting money into it or taking money out by way of a salary, dividends or a claim for expenses (costs paid from your own funds) need to be accurately recorded as arm\u2019s length transactions in the books of the company.<\/p>\n
Avoid using the company\u2019s money to pay personal costs or randomly taking funds from the company for your own use.<\/p>\n
Register with HMRC<\/strong><\/span><\/h4>\nGetting the company registered at Companies House is easy and usually takes less than 24 hours. However, this is just one part of the story. \u00a0The company has to be registered at HMRC for corporation tax and possibly VAT and PAYE. As a director of the company you should also register for self assessment if you\u2019ve not registered before and expect to receive dividends from the company.<\/p>\n","protected":false},"excerpt":{"rendered":"
If you\u2019re thinking of starting out on your self employed journey via a Limited Company, this is an essential read to ensure you avoid some common pitfalls. Formation Houses Setting up a limited company is…<\/p>\n","protected":false},"author":1,"featured_media":13321,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1067,1033],"tags":[],"class_list":["post-13319","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-to-review","category-1-about-accounts-and-tax"],"_links":{"self":[{"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/posts\/13319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=13319"}],"version-history":[{"count":2,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/posts\/13319\/revisions"}],"predecessor-version":[{"id":13325,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/posts\/13319\/revisions\/13325"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/media\/13321"}],"wp:attachment":[{"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=13319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=13319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cheapaccounting.co.uk\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=13319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}