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What is a limited company?
A limited company is a separate legal entity to its directors, which means that the company is responsible for everything that it does, separately to you as an individual. Any profits belong to the company, rather than you, so you are paid as an employee.
Your company charges fees to your clients for services provided, and in turn pays you via a combination of salary and dividends. PAYE must be paid on salaries, and the company may meet any other expenses that relate to the operation of the company. The company must have its own bank account to keep company expenditure separate from personal expenditure.
What is a sole trader?
A sole trader is a person who is the exclusive owner of a business. As a sole trader you keep all profits after tax, but you are also personally responsible for any losses your business might make. There is no distinction between you and your business, so you bear all legal and financial responsibility.
How do I decide which trading format is best for me?
If you’re unsure which format to choose, call us today on 0203 805 5555 for guidance and advice.
How much does it cost to set up a company?
We charge £100 (+VAT) for setting up a company and for arranging all the necessary documentation. This fee covers identity verification, 24 hour setup with Companies House, your Certificate of Incorporation, Memorandum & Articles of Association, Share Certificates and Statutory books.
How can I check if my company name is available?
The Companies House website offers a company name checking service, which you can access here.
How long does it take to set up a company?
Because we incorporate online at Companies House, if we receive your application before 11am, your company is usually set up on the day we receive your application.
Our administration team works as quickly as possible to achieve same-day incorporation but Companies House response times can vary.
What is a Director’s service address?
Every director must provide Companies House with both a service address and their usual residential address. The service address is where personal documents relating to the director can be delivered and where an acknowledgement or receipt can be provided if required. Your service address will be visible on the public register, whereas your residential address (if different) will be protected information and will not be visible.
You are not obliged to have a separate service address, but if you decide to use a single address for both, this information will be visible through search engines and various third party web sites.
You may choose any address as a service address except a PO Box or a DX number. Our Registered Office and Security package includes provision of a service address, for a charge of £100 (+VAT).
Should I set up my company now or wait until I get my first contract?
This is your choice, although we usually recommend that you set your business up as early as possible once you have decided to work independently.
Setting it up early will mean that your affairs are in order for when you start your first assignment. Once your company has been incorporated you will need to set up your company bank account. Setting up a bank account normally takes around 3 weeks.
This will allow you adequate time to prepare your marketing materials, such as business cards and headed paper, and secure a domain name to match your chosen company name with a view to building a website for your business.
Can I start work before the company is incorporated?
Yes, provided any invoices for the work you have done are dated after the date of incorporation.
Can I sign a contract before the company is incorporated?
No. You cannot enter into contracts in the name of a company before the company has been incorporated. However, you could check with Companies House that the company name is available and draw up a contract in the proposed name of the company, leaving the date to be inserted when the certificate of incorporation is received.
Can my partner/spouse use my company?
Yes. It is perfectly feasible for another person to use your company, provided they are working to the same pattern, i.e. selling their knowledge and skills and not using it for trading/investment.
Under certain circumstances, there may be a tax advantage if a partner/spouse is made a shareholder, but this depends upon individual arrangements. If you would like further advice, please get in touch with our team on 0203 805 5555.
Can my children be shareholders?
We strongly recommend that children under the age of 16 are not made shareholders.
Do I need to be registered for VAT?
You are obliged to register for VAT only if your income exceeds a certain limit in a full year. However, if your income is below this limit you may still register on a voluntary basis, as it may be beneficial to do so and can appear more professional to potential clients. If you would like further information on VAT, our team can advise on this.
Are there any reasons why I should not register for VAT?
If the majority of your clients are not registered for VAT or you work mainly abroad, and your company income does not exceed the annual limit, you might choose not to register the company for VAT.
When can I be registered for VAT?
You should be registered for VAT from the date you started your first contract.
Should I use the VAT standard scheme or the VAT flat rate scheme (FRS)?
Your business can join the flat rate scheme if, in the next year, your turnover is estimated not to exceed a set threshold (currently £150,000). The FRS simplifies your VAT accounting, as you pay over to HMRC a reduced percentage of VAT on your gross sales, but you do not reclaim any VAT on your purchases. Therefore, it is suitable for those with fewer expenses. For further information about VAT and to discuss which scheme is right for you, please give us a call on 0203 805 5555.
Do I charge VAT if I am working abroad?
B2B sales of services to other EU countries is deemed to be based in the place of supply and therefore outside the scope of UK VAT.
This type of sale must be dealt with under the reverse charge scheme. Law states that when your customer has multiple establishments then the place of supply is the place that receives and benefits from the service provided. The customer has to declare and pay the VAT in their own country.
The reverse charge scheme means that your invoices must not have any VAT on them but state ‘Subject to reverse charge in the country of receipt’. It must also have the company VAT registration number, preceded by GB, your customer’s VAT registration number and their country code.
When can I set up the company bank account?
You will be able to open the company bank account as soon as you receive the Certificate of Incorporation, but it is a good idea to contact your chosen bank as soon as possible after your company has been set up to complete all the necessary documentation.
Can my company own a car?
Because of the income tax, National Insurance, VAT and Corporation Tax implications, our package does not allow for company cars. It is advisable for you to own your car, but to charge your company for business miles at the agreed HMRC mileage rates.
How long do I have to stay with Accounting for Less?
Our contracts are rolling, allowing you to make alternative arrangements at any point. You can also change your subscription from within the client area any time. If you are unsure whether you are on the right subscription and need advice, please call us on 0203 805 5555.
Can I use my company for trading/investment?
Our package is not suitable for clients who buy and sell goods and hold stock or investments. Because the vast majority of our clients fit a particular profile and keep their records in exactly the same way, we are able to standardise our work and keep our fees to a minimum, whilst still offering a personal service.