Directors are appointed to run the company. Directors do not need to own shares in the company.
The company’s finances are separate from the members’ and directors’ personal finances. Any profit after tax made belongs to it. The profit after tax can be shared amongst the owners pro-rata to their stake in the company.
- Limitation of liability for debts, as long as you have not broken the law, so personal assets are not at risk.
- Increased credibility with customers and suppliers
- Protection of trading name
- More profit retained as personal income
- Legal responsibility being a director and running a limited company.
- More onerous filing requirements
To incorporate a company you must
- subscribe for shares in the company.
- appoint a minimum of one director.
- register it with Companies House.
Once incorporated you must
- open a company bank account
- inform HM Revenue & Customs when the company commences trade
- register it for VAT if sales in the year are anticipated to be more than the prevailing threshold (refer to Some Information page for current registration level).
- register it with HMRC as an employer.
Each year the company must
- File an annual return
- lodge accounts in an approved statutory format
The company must
- submit a Corporation Tax return every year
- submit a VAT return every 3 months and pay the VAT owed, if the firm is VAT registered.
- submit a Full Payment Submission before every payroll payment.
Each individual director must
- Submit their own Self Assessment tax return and pay any additional income tax not collected through PAYE
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