Limited Company, now what?
Once a limited company has been registered, the legal obligations as a director or shareholder begin.
Companies House and HM Revenue & Customers will now have you on file, starting their process of sending you correspondence, reminders and advising you of your legal obligations as a company director. This can be overwhelming, with late filing fees, penalties and threats to strike off a company all possible but avoidable threats to your business.
Here’s a quick summary of your annual and quarterly obligations:
Every year, you are legally obliged to keep accounting records and will need to file statutory and, probably, abbreviated accounts with Companies House. Under typical circumstances, these are due within 10 months of your Annual Reference Date (commonly referred to as ‘year end’).
HMRC works separately to Companies House and each department requires a separate set of accounts.
The CT600 form declares the profits or losses made from the Company and you are required to complete this form along with a full set of statutory accounts (not the abbreviated version sent to Companies House).
If you are the director of a limited company, you are legally obliged to file an Confirmation Statement (previously known as Annual Return). These are not to be confused with Annual Accounts; this document provides a snapshot of the general information about the company – the directors, the shareholders and registered office amongst other things.
The most efficient way to file this return is via the Companies House web filing system at a cost of £13. The paper version will cost significantly more at £40. We recommend that you set up your company on the Companies House Web Filing system, not just from a cost perspective, but also because you will receive e-reminders from Companies House a month before filing, telling you the Return now needs to be completed.
It is a criminal offence not to deliver this on time and you risk facing penalties for late filing or worse still, could have your company struck off.
Regardless of how much they earn, each company director has to complete a self-assessment and declare all income, not just what they receive from their company.
Quarterly VAT Returns
All businesses, not just limited companies, whose turnover exceeds the VAT threshold in the previous 12 months, must become VAT registered.
Being registered for VAT means you need to complete an online VAT Return. This is due at the end of the month following the quarter end date. It is essential to bring all of your accounts up to date so that this can be completed on time.
Late filing of any of the above will incur fines, penalties and interest payments. Punishment for significantly late filing of documents can include a criminal conviction.
Don’t forget, even if you haven’t begun trading yet (or maybe have stopped trading), you are still required to file dormant accounts and an annual return.
Administering a limited company comes with responsibilities and costs, so make sure you fully understand what you are signing yourself up to before you form your limited company.