Getting Registered and staying Legal in Business
The name has been picked, the target market selected, supplies even bought but what about getting registered and legal?
When starting a business you MUST have it registered with HMRC, how this is done depends on what you choose to register as – a Sole Trader or a Limited Company. Each registration form offers different responsibilities and rules, here we supply a comparison of the different registrations and what they would mean for you.
Starting out small does not always mean you are going to stay small, so it may be best to register as a Limited Company in advance to save hassle in the future. A Limited company must have at least one director – usually the owner and register the business name with Companies House. A Limited Company’s responsibilities include:
- Keep and provide HMRC, when requested, detailed accounting records – these include any assets owned by the company, stock the company owns at the end of the financial year, goods purchased and sold
- Keep details of any shareholders involved with the business, promises of the company to repay any loans (debentures) and payments to cover if something goes wrong (Indemnities).
- Keep records for up to 6 years – unless the records show a transaction covering a period of more than one accounting period and details on equipment that may last longer the 6 years.
- Pay Company Income Tax and National insurance contributions from any salary taken as well as employer’s National Insurance Contributions – including any benefits such as the use of a business asset i.e a car
- Update Companies house whenever the company moves address, changes to contact details including those of directors and secretaries, or if you hire an accountant.
- Send in a Company annual return within 28 days of the anniversary of the company’s incorporation (registration with HMRC)
- Directors are required to complete Self Assessment tax returns on top of Company annual returns.
- Correctly advertise the company’s name, registration number, where they are registered (England and Wales, Scotland or Northern Ireland), and the fact it is a Limited Company usually the use of LTD.
- Invoices must include specific information – Clear descriptions of what is being provided, the supply date, VAT amount if applicable, date of the invoice and a unique identification number as well as all the company contact information as it appears on the registration document.
If you register as a Public Limited Company you are also responsible of issuing shares information and values both to the shareholders and HMRC.
On the other hand if you choose to start off small and not ready for the responsibilities of a Limited Company then registering as a Sole Trader may be the best option for you. As a sole trader you can still take on employees and the responsibilities that entails however you are also more responsible for the accounting of the business. Your responsibilities will include:
- Keeping records of your business sales and expenses – including PAYE, VAT Records and Personal income such as drawings from the business.
- Sending a Self Assessment tax return ever year between the 31st October and 31st
- Paying your own Income Tax on profits and Class 2 and 4 National Insurance contributions.
- Your business debts – these become your debts and affect your credit rating.
- All bills associated with the business.
- Registering for VAT when that threshold is hit – The current threshold is £83,000
- Registering with the relevant industry schemes and departments – such as health department – associated with your business.
Regardless of the business you choose, make sure your name follows the rules and is highlighted on all invoices, marketing materials and any other official business paperwork. Registering can take a few minutes to do online with the correct paperwork and you can be up and running within 24 hours. So get in touch today and let us get you set up and running the way you want.