Starting a limited company is an exciting step in your business journey. However, there are certain steps to take and documents to prepare before you start your official registration process. If you don’t know where to start, this guide will provide a comprehensive overview of the steps that need to be taken before you can establish your limited company and the role of a limited company accountant.
Choose a company name
An ideal starting point is thinking about what to call your company. It needs to be a unique name and not similar to other companies on the Ltd company register. You can check Companies House to see if your chosen name is available.
You need to be careful not to choose company names that might have trademarked words. It’s also worth checking at this point domain names to make sure you can get your desired website address if you are planning on using the company name in this address.
Register your business
You will need to register your company at the company’s house. It may be worth seeking professional advice from an accountant at this point to help you through the process of discussing different share options, although this can be done independently. After this step has been completed successfully, directors must be appointed who are responsible for making decisions about how the company is run—and ensuring that all legal obligations are met (which includes filing annual accounts).
Directors must also provide their personal information such as date of birth, address history etc., which will then be kept on public record at Companies House along with other required documents such as Articles of Association (a document outlining how the company should be run) and Memorandum of Association (a document which outlines the purpose and objectives of the company).
Set up a business bank account
Opening a business bank account is an important step in setting up your business. It helps you manage your finances, track your expenses, and set up automatic payments. Firstly, you have to choose a bank. Depending on the type of business you’re running and your budget, there are different types of accounts that may be right for you.
For example, if you’re just starting out, you may want to look into an online-only start-up account. Create your business profile, which includes all information regarding your company. Lastly, provide documentation, as most banks require proof of identity, such as passports or driver’s licences, before they allow customers to open an account.
Liability and other insurance will need to be obtained. If you have transitioned from a sole trader to an Ltd company, insurance will need to be obtained in the Ltd company name. This is because the Ltd company is considered a separate legal entity and is therefore responsible for obtaining its own insurance coverage.
It is important to have liability insurance to protect the company from potential lawsuits or financial losses due to third-party claims of injury or damage. Other types of insurance, such as property or workers’ compensation, may also be necessary, depending on the nature of the business. It’s highly recommended to seek professional insurance advice when starting a company to find out the coverage that is needed.
Set up a business plan
This is important for any business owner; it can help you achieve your business goals more effectively. It can also be helpful in securing business funding.
A business plan is a detailed document outlining the specific steps and strategies that a business will take to achieve its goals. It typically includes information on the company’s products or services, target market, financial projections, and management team.
Having a well-written business plan can help a business owner stay organised and focused and can also be used to attract investors or secure business loans. It is also a good idea to periodically review and update the business plan to ensure that the business is on track to achieve its goals.
Register for Taxes
When you register your company at a company’s house this will automatically trigger corporation tax. Corporation tax is the tax a limited company pay on their profits
You don’t need to register for vat until your turnover reaches a certain level, currently for the 22/23 tax year this is £85K. You can voluntarily register for vat under this threshold, and some choose to do this to increase credibility. It’s important to understand your requirements and obligations associated with being vat registered so we would recommend seeking professional advice before doing so. There are also many different vat schemes that they will be able to advise you on.
PAYE enables you to pay staff and also potentially directors. It’s important not to register for PAYE until you are ready to pay staff, as once registered, a return will need to be filed every month even if no one is paid during the month.
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Everything you need to know about accountants for small businesses.
Is it worth getting an accountant for small businesses?
Absolutely! An accountant can be a game changer for small businesses in terms of taxes and finances. Many small business owners don’t have the time, resources or expertise to expertly manage their taxes and finances, so an accountant can save them from costly mistakes and provide valuable insight on how to reduce their tax burden and maximise profits.
What is the role of an accountant for small businesses?
The role of an accountant for a small business is invaluable. An accountant can help create and maintain accurate financial records, track expenses and income, manage payroll, analyse financial performance, and generate meaningful reports for both internal use and external stakeholders such as lenders or investors.
Accurate financial records are essential in order to ensure the proper filing of taxes, secure insurance coverage if needed, obtain financing from lenders or investors if necessary, and provide an ongoing snapshot of the company’s finances. Accounting software has made this process much easier than it used to be; however, having someone knowledgeable in finance can still go a long way toward ensuring that all areas are covered.
What type of limited company accountant is best for small businesses?
When considering the type of accountant best for small businesses, it is important to consider the size and complexity of your business.
For smaller businesses with simpler financial needs, such as chargeable time tracking, billing clients for services provided, and paying GST/HST taxes on revenue generated from sales activities, bookkeepers are often sufficient. They also assist companies with reconciliations, including accounts and payable activity each month.
Although bookkeepers might be able to file corporate income tax returns (based on provincial regulations), they may not offer complex accounting advice that would require an advanced understanding of accounting principles.
How much is an accountant for small businesses in the UK?
The cost of hiring a limited company accountant for a small business in the UK can vary greatly depending on the size, type of business, and services you want. Contact Direct Peak now and ask us for a quote!
What are the skills that a limited company accountant should have?
Accountancy involves a wide range of important skills, from accurately taking financial records to effectively communicating financial information. Being an accountant requires many technical aptitudes, as well as strong communication and interpersonal skills. An accountant should have attention to detail, analytical thinking, maths proficiency, problem-solving, communication skills, and technology skills.
Direct Peak provides a dedicated business tax accountant, who will prepare your annual accounts and tax returns. They will be on hand to answer any tax queries you have.
Your business tax accountant will ensure that the company is set up in the most tax-efficient way and that you are claiming for all the correct expenses to maximise your earnings.