Now that you have formed your limited company for should take the following actions:
- Bank Account – Every company needs to have its own bank account. To open and company bank account you will need to take the company incorporation certificate into the bank. Please ensure that you pay the company for your share capital once this is opened.
- Bookkeeping – It is a requirement by the Companies Act and Tax Law that up-to-date bookkeeping records are kept. HMRC recommend that these are updated once a week. We would suggest that you use an online bookkeeping system or for a single director company our free bookkeeping spreadsheet.
- Company Communications – It is important that any communications from your company shows the company number and the registered office. This includes stationery, email footers, website and business cards.
- Insurance – You should consider the need for the company to have insurance. This includes, employer’s liability, public liability, and professional indemnity insurance. You should review the need for insurance periodically.
- Payroll – If the company is paying you, any directors or employees then you will need to register for PAYE with HMRC. Green Accountancy can take care of this for you, prepare the payslips and file your monthly RTI with HMRC.
- Benefits in kind – if the company buys anything for directors or employees including drinks and meals then there will usually be a benefit in kind taxable on the employees and additional employers national insurance payable by the company.
- VAT – Once sales exceed £85,000 (2018/19) for the last 12 months you have to become VAT registered. However, it may be beneficial for you to register voluntary before this time. This is particularly true if your customers are also VAT registered.
- National Insurance – If you were previously a sole trader, you should inform HMRC you are no longer self-employed and stop paying class 2 national insurance.
- Dividends – If the company is limited by shares it may be that the most efficient way of withdrawing funds is taking a low salary and the rest as dividends. It is important that dividends are voted, recorded and paid correctly so that HMRC cannot argue that your dividends are salary payments. You should refer to the Green Accountancy dividend procedure document if you are unsure how to do this correctly.
- IR35 – It is important to determine whether the company may be caught by the Intermediaries Legislation (IR35). Simply put this asks the question, “were it not for the limited company, would you be an employee of the organisation paying your company?”
- Use of home as Office – If the company uses your home for business then it may be suitable for you to make a use of home as office claim. If this is the case then you should have a written agreement in place between you and the company.
- HMRC Online Services – You should register with HMRC Online Services. You can do this here.
- Personal Tax Returns – HMRC require all directors of limited companies to submit annual personal tax returns, even if no additional tax is due.
If you would like to discuss any of this in more detail please book a chat.