Starting a digital marketing agency can be a great progression for a self-employed freelancer, contractor or small business owner. This checklist, developed by our accountants, highlights some key areas and features some expert tips on how to start a digital marketing agency and form your limited company.

If you’re confused about the implications of going from self employed to a limited company, then this guide is for you. Learn how setting up a limited company could save you money and familiarise yourself with your responsibilities including when to file your annual returns and when to send end of year accounts to HMRC.

The beginning..

The first step is to successfully register your business with Companies House. You will need to appoint yourself as a director. Every business must have a director or directors.

We can do it for you

Our accountants offer a quick and easy service to help you get your digital agency set up and your limited company incorporated. They can do the following:

  • Register your limited company
  • VAT registration
  • Budget setting / financial forecasting
  • Set up payroll for you and any staff
  • Advise on the most efficient way to take your earnings

Tax

A newly formed limited company has several tax obligations that you may or may not be aware of. Our accountants can help you manage tax payments and register your company for tax. Key areas include: Corporation tax, vat, personal income, PAYE and national insurance.

VAT

VAT is an additional sum which is added to the prices of goods and services on the invoice. Limited Companies are not automatically enrolled for VAT and will not be required to register or pay VAT unless turnover exceeds the threshold. Digital marketing agencies who sell services to clients in the EU must pay VAT in the destination country. Learn how VAT MOSS makes this easier here.

Corporation Tax

When you register your digital marketing agency, you will need to register for Corporation Tax, something which our accountants can do for you. This tax is applied to profits after you have paid your employees’ salaries and before you withdraw dividends as a company shareholder. All limited companies must pay tax and submit a yearly CT600. Your first tax return should be filed within 12 months of your company’s year end and tax payment must be made within 9 months and 1 days of your year end. Always take care of your tax sooner rather than later.

Personal Income Tax

Along with paying company tax, you must also pay tax on any income you receive, typically in the form of dividends and company salary. If completing your annual return online you must complete self assessment by the 31st January deadline – for the previous tax year. Failure to submit your return before the deadline will result in a penalty. Paper returns have a separate deadline. If you need help registering with HMRC for this service or need to submit a return, let one of our accountants take care of things.

Important Dates

Self assessment – The director of a limited company is required to complete and submit self assessment once a year. See what happens if you miss the self assessment deadline.

P60 – The P60 shows salary paid and amount of tax paid in the tax year. This is issued once the tax year has passed. Learn more about the P60 here.

CT600 – This must be filed to HMRC once a year containing details of income minus any allowances/expenses. Corporation Tax return is due 12 months after your first year end.

P11D – Details any benefits and expenses claimed during the tax year (6th April – 5th April).

Annual return – A snapshot of your company at a given moment in time.

Abbreviated accounts – Companies House must receive a set of abbreviated accounts each year, including information regarding cash in the company account, assets, creditors and debtors. The first set of abbreviated accounts are due nine months after the first company year end.

Insurance

Insurance offers peace of mind. There are three main insurances you may wish to consider purchasing for your digital marketing agency:

  • Public liability
  • Employer’s liability insurance
  • Professional indemnity

Invoicing

If you have an active Digital marketing agency, you will hopefully be raising invoices to clients for the company’s services. When creating an invoice it’s always a good idea to research and look online for examples. A good invoice will:

  • Have the word ‘invoice’ printed
  • Your company name, address and company number listed
  • A description of goods or services provided
  • Any amounts due / rate charged
  • Itemised breakdown, showing if VAT has or has not been included
  • Payment terms if there are any

Expenses

New businesses often don’t understand what they can and cannot claim as a business expense. The following list is not a complete overview of every expense, but our accountants can provide details for each individual situation. Here’s a list of common allowable business expenses for a digital marketing agency:

Office rent – The cost of your business premises is an allowable expense.

Sales & marketing – Advertising costs and marketing material such as websites.

Mileage & Travel – Mileage and travel is often a confusing subject. Any work-related travel is in most cases claimable – if you work in one. Mileage is currently calculated at 45p per mile for the first 10,000 miles and 25p thereafter. Keep a log of all business trips, inc time, date, distances and a note of your client that you were training or visiting.

Legal & Professional Fees – Costs of running your business, such as business planning, financial management and accountants fees.

Insurance – Personal liability insurance and other similar insurances.

Courses & Training – All courses that are relevant to your industry inc travel costs.