How To Set Up Best Practice Guidelines for your Company
To ensure your company meets with all of its compliance requirements for HMRC and Companies House, you need to set up some best practice guidelines to follow. While it can be a really exciting time when you decide to set up your company and register with Companies House, you now have legal responsibilities to meet with, so it can also be quite a daunting step to take too!
Forming a Limited Company now means that your business is a legal entity in its own right. However, the company isn’t going to run itself, so you need to know what your ongoing responsibilities will be going forward and set up some best practice procedures to ensure you meet with all of your obligations.
What is a limited company?
A limited company differs greatly from a regular business because it has its own legal status that is separate from the people who own and run the company. When you set up a regular business, all finances and business decisions are solely yours to invest and make. This means that should anything go wrong with the business, your own personal finances and other assets will be at risk.
Should you need to shut down your regular business for whatever reason, all debt created in the business name will be your responsibility to pay off. This means that your business creditors will be able to sue you to compensate for their investments and losses. Even if you sell off any business stocks and assets, you may not be able to raise enough money to pay off the debts owed.
On the other hand, if you form a limited company, all of the company finances, credit and debt will be in the name of the company rather than in your name. This means that should anything go wrong, your own personal assets will be protected.
Another positive side of forming a limited company is that after tax, the profits the company generate belongs to you. This means that you can use your company profits to pay yourself a salary, re-invest money into your company, hire staff and take on more shareholders – if you want to.
Registering your Limited Company
While it may sound complicated to register your own company with Companies House, you can make the whole process much simpler by using a trusted team of professional company formations experts, such as Your Company Formations, to help you out and make the whole process as smooth and quick as possible. With our years of collective formations knowledge and experience, we can get your new company registered and operational in as little as one working day!
What we will need from you to enable us to form your company:
- A suitable name
- A company address
- At least one director
- At least one shareholder
- A SIC code
If you are unsure about whether you should form a company limited by shares, a company limited by guarantee, or a registered partnership (LLP), read our helpful post: How to Choose the Right Limited Liability Structure for Your Company.
Once you have decided on your company structure, then you can choose a suitable company formations package and we can get to work right away for you.
What you need to do next
Once your new company has been formed, you as a company director will need to make sure you meet with all of your compliance needs. Failing to meet with your responsibilities will mean your company will be at risk of receiving hefty financial penalties or even face being closed down.
Companies House will issue you with a UTR (Unique Tax Reference) that you will need to use with HMRC to operate PAYE and register for corporation tax. This is needed when you charge VAT and begin to employ staff.
Set up business banking
As a registered company, you will need to keep your business finances completely separate from your own personal finances. This is why you will need a business bank account once your company starts trading. It can be advantageous to have a business bank account simply because it will separate and protect your own personal finances from that of your business, plus it can help to secure business loans at better rates because your company is seen as a fully legitimate business, and therefore offers less risk to lenders and creditors.
New Data Protection laws came into effect in May 2018 and means that businesses now have to comply with much tighter standards for protecting their sensitive customer and staff data. It would be wise to read up about the latest GDPR changes and ensure that your new company has data protection procedures in place that meet with all government requirements.
Business insurance cover
If you have at least one member of staff then you will need to have Employers’ Liability Insurance. Depending on how you choose to operate your business, you may want to look at other business insurances such as public liability, building cover, business downtime cover and cyber risk cover.
Your annual business responsibilities
Running a limited company involves a lot more paperwork than running a simple standard business set up. This includes certain annual commitments such as submitting a company confirmation statement every 12 months. This will need doing regardless of whether or not your company is actively trading or is dormant. Your confirmation statement confirms to Companies House that your business details are all correct and up to date.
You will also be required to submit certain company documentation through Companies House Web Filing online each year. The documents and information that can be sent through Web-Filing are:
- Annual accounts
- Annual returns
- Change of company details
- Dormant (inactive) accounts
- Appointment and removal of secretaries and directors
- Copies of resolutions
- Share’s allotment
- PSC register changes
To use Web-Filing, you will have to register with an email address and request for a confirmation code. The code is the same (electronic equivalent) as the signature of a director.
Get more information and assistance
Should you need any more information and help with setting up your registered company and putting your best practices in place, then our friendly team are here to help! Do not hesitate to contact us for our expert help and guidance.