Company Formation Services

Only the owners of a company limited by shares are legally allowed to remove profits made by the business.Even after this, certain steps must be followed. This is because of the separate legal identity of companies limited by shares. This implies that unless the profits are disbursed to shareholders and directors, the money belongs to the company.You can remove all company gains as pay for director; however, it is smarter tax-wise to take out smaller pays and make up whatever remains of your wage as shareholder profits. The most ideal approach to do this is to take a pay up to your Personal Allowance, which is free from taxation. This will likewise guarantee you save your entitlement to state benefits and pension.You can offer profits to yourself, based on pro-rata in connection to the rate of organisation shares you possess, whether that is full, half or any percentage. This can be carried out as much as needed, so far the firm still has enough held-up post-tax net income. On the off chance that there are no remaining profits after settling these bills, you can't share out profits in form of dividends. If this is disregarded and you go ahead to issue out dividends, you could attract serious legal action from the HMRC. On the other hand, even if your company is experiencing a loss in its business transactions, you could still pay salaries because this is regarded as an expense an must be settled.

Step 1: Declaring dividends

The balance sheet has to be printed out, covering periods from when the interests will be disbursed.Dividends come in 2 forms – interim and final. Interim refers to the dividends that are to be settled at intervals and this is done all through the year. Note that it is dependent on whether the company has profits or dividends to be distributed. On the other hand, final dividend refers to the profits disbursed on a yearly basis. Both must be paid at a period that doesn’t exceed nine months after the company closes it’s annual books. This date is popularly referred to as Accounting Reference Date (ARD).Organisation executives must hold an executive meeting to authoritatively "announce" interim profits. This must be done, even if you alone are the shareholder and director of the company – it appears to be completely irrational; however, it is a legal obligation that must be done.Shareholders must pass an ordinary resolution in writing or at a general meeting to show their consent, before the final dividend is issued.It is advisable to have a copy of profit and loss records as well as the balance sheet for the period for which the dividend is to be shared. This will guarantee that profit disbursement doesn’t go beyond the profit made by the company.

Step 2: Working out dividend payments

The gross profit is the whole you will incorporate into your Self-Assessment tax returns.In the event that your organisation has any extra gains after settling liabilities, expenses and taxes, you are permitted to issue these profits to shareholders based on their rate of shares possession.For instance, if you own half of the shares of your firm, you are entitled to half of the profits made. If £2,000 was made as profit by your company, you are entitled to £1,000.A 10% notional tax is applicable to this dividend because 20% of the profits must have been deducted as corporation tax. This gross dividend will then be reported self-assessment every year, notwithstanding your wage as a director as well as any other sort of income.To compute the tax payable on profits, you are to find the product of 0.9 and your net income. This will then equate to the gross income, credit tax of 10% inclusive. Your Self-Assessment tax return will include this gross profit. It is from this that personal tax liability and aggregate yearly income can be calculated.Case study: a gross dividend of £1,111.11 is gotten by computing the net profit of 0.9 x £1,000 (10% tax credit equates £11). You will get net £1,000 profit from the organisation, yet this will be equal to £1,111.11 when you are working out your yearly tax obligation to cover the organisation has officially paid on these money. You will be taxed 2 times if the notional tax credit is disregarded. Firstly as corporation tax and secondly as Income Tax.

Step 3: Issuing dividend vouchers

A profit voucher is a receipt that gives the critical insights about the profit.For every profit an organisation shares, a profit voucher must be made and offered to the shareholder. This voucher is in some cases called 'dividend counterfoil'. It is not an uncommon sort of document, it’s essentially a sheet of paper or an e-document usually pegged with electronic mails. This document contains information about profits such as:

• Company name
• Registration number of the details.
• Issuance Date
• Name and address of receiving shareholder
• Class of Share
• The figure of the dividend being received by the shareholder
• Tax credit figure
• Authorising officer’s signature

How often can I issue dividends?

You can issue profits as often as you want: every day, week after week, month to month or yearly.You can offer profits as frequently as you want – day by day, week by week, month to month, bi-monthly, quarterly, bi-yearly, or every year – so far the organisation has adequate held-up profits to do such. Because of the required paperwork for the profits, interim dividends are often recommended by most accountants because the records will be easier to maintain; more so, because it coincides with VAT payments. You must understand that you can issue it every week if you are cut out for the work involved.Then again, you may feel the need to issue profits on a yearly basis at the conclusion of each tax year or sporadically all through the tax year just when your organisation gains a specific level. It's totally at your digression.Profits give an amazing chance for efficient planning of tax. You can defer the sharing of profit to the next year, which is helpful on the off chance that you need to keep your wage inside of the essential tax rate, or you intend work for one year and take time off the next year.

Opening your own business is a challenge that requires motivation, determination, and discipline. Before starting any endeavour, you should consider factors that will affect the decision before committing to starting a business.Ask yourself the following 10 questions to lay the foundation for the success of your business:

Do I have what it takes to be a business owner?

Being an entrepreneur is not a job but a lifestyle. It not only takes commitment, passion, and conviction for your enterprise, but also skills, energy, money, staff, and knowledge to start a business.It will be important to know your strengths and turn them into engine of your business. It is imperative that you feel supported by your family, as many successful entrepreneurs have recognised the support and encouragement they receive from their families as a key to business success.

Why do I want to start a new business?

Either because you had an innovative idea, because you want to enhance an existing service, or because you want to take control of your life. You need to define what you want to do and what is the end. One of the essential characteristics of successful entrepreneurs is that they all wanted to change the world, improving it with their business idea. In any case, you should be prepared to spend time, money, and resources to start your business.

Is my idea feasible/viable?

Identify the business you want to start. Describe the product or service you're trying to sell. To be on the right path, enter your product or service in a market where demand exceeds supply, fill an unmet need, or be competitive based on quality, price, and location.

Who will be part of the business?

Before adding people to your project, you should be clear whether it is really appropriate, if skills are complementary, and if you can work together. It is important that the entrepreneurial team is aligned in objectives and expectations to be able to pass through difficulties. After all, the main factor that will determine the success or failure of an enterprise is the people who run it later.

What is my market potential?

Before investing time and money in the business, know your market. To acquire knowledge of the market you have to analyse it. The market analysis is to obtain information about potential customers and determine the demand for your product or service. The more information you obtain, the better you can promote your business and the better your opportunities to capture market share.

What is a business plan and why do I need one?

Knowing where we are going and how we will get there is essential to guide us in difficult times. The business plan is a basic tool of management, acting as a compass to lead. This plan establishes a commitment to the actions of the company, allows tracing operations, the organisation of people, material resources, tasks to be carried out, and how results will be measured.

How much money do I need to start my business?

When companies are taking their first steps, they require significant resources. Entrepreneurs must first define up to how much they are willing to risk, whether in money, time, contacts, or resource utilisation. You must consider that future business will not generate immediate returns and accounts must ensure that you have sufficient financial reserves to keep your family and business for eight months at least.

How can I finance my business?

The most common way is to use equity or borrow money from relatives and/or friends. Another way is to borrow money from the bank or other financial institutions. Another option is a partner who wants to share the business risk. If you go to investors, make sure you stay with most of the shares. A final option is to participate in contests on business projects developed by government agencies, universities, or other means, where the best business idea is awarded with full or partial funding of the project.

Have I sought advice on the legal and accounting aspects of my business?

Be sure to select a solicitor and accountant to determine how you will manage your business, where you will situate you company, and how many employees are needed. You might need accounting software and other computer systems. You'll have to keep sufficient records to support your business in order to generate financial statements and file tax returns.

How do I incorporate my business?

Define which legal structure suits your company. The scenario will be different if you're planning to work as an independent contractor or as an entrepreneur and business owner, if you will join with family and friends, if you want to formally establish a partnership, a corporation, or other legal entity.Answering these questions will allow you to begin to launch your own business. They are basic and general points to start a business. As you evolve the business plan, you can think about more detailed aspects directly related to the type of business in particular.

Beginning and working a business can be simple in the United Kingdom. Then again, the smallest missteps can complicate the whole process. Individuals wishing to form a company are regularly uninformed of the methods and wind up committing errors that are highly consequential.For instance, some create an organisation limited by shares when they really needed to create on limited by guarantee; others may issue all shares of the organisation in the starting stage itself when they can actually offer just a couple. To keep away from such mix-ups that are monotonous and too difficult to undo, you can decide to employ the services of company formation agents.The real procedure of registering an organisation can be finished within a period of 3 hours after the submission of application. Be that as it may, there are a few stages involved in this:

• Selecting a name for the company – The intended name of the organisation can be looked up via the internet to determine availability. Individuals purchasing an existing organisation can likewise change the name of the obtained organisation to the fancied name if available.
• Registered office – All business within the UK are expected to own a registered office address where all notices from Companies House, HMRC and other document pertaining to the company can be delivered to. This doesn't need to be your physical address where you work, but it is publically available so a virtual address is often preferred.

Immediately you submit your application online, and make the necessary payment through a safe framework, a receipt is created and affirmation sent. The points of interest of the new organisation created are sent via email and duplicates of reports, for example, Certificate of Incorporation, Certificate of Non-trading, Articles and Memorandum of Association and Minutes of the initially meeting held will be sent via a top post.

• Bank Account – It is compulsory that a bank account be opened for all transactions.
• Insurance and Tax registration - every business is mandate to register for national insurance, VAT and corporation tax as well as pay the taxes as at when due.

Finance and accounts – All organizations in the United Kingdom are to keep up appropriate record books and document annual returns to Companies House within a predetermined period, upon a fault at this, a punishment must be paid. It is advisable to hire an accountant to oversee all these paperwork. If you can’t afford it, financial service firms can do it for you.

• Staff – Employing the right employee is critical to implement the planned exercises proficiently and precisely.
• Website – If the organisation has a site, then all points of interest, for example, organisation number, official office location, contact information like, email, phone number etc must be shown.

What is a holding company?

This is a kind of business that particularly has to do with investments, resources and administration, as opposed to offering goods and services with a perspective to gain profits from production and sales. A holding organisation will be restricted by shares and its fundamental exercises will include owning resources in another organization (or numerous organisations) for example, real property, intellectual property and shares. Beside these capacities, a holding organisation has no other kind of business activity.Subsidiaries refer to other firms in which resources are held. In the United Kingdom, the company where over 50 percent of assets are held is called the ‘parent’ of these subsidiaries.Contents:

• The legal requirements of a holding company

So as to become a holding company, the Companies Act 2006 (sec. 1159) noted that an organization will be viewed as the subsidiary of a holding organization in these circumstances:

• More than half of the voting rights in the subsidiary.
• The directors of the subsidiary can be removed or replaced by parent company.
• In agreement with the shareholders, the parent company is a member of the subsidiary and it controls a greater part of the voting rights in the subsidiary.
• Tax liabilities of a holding company

A major attraction of this sort of organization is the potential for saving taxes – majority of the dividends and share disposals are free from taxation. On the off chance that a holding organization claims a 'significant shareholding' of no less than 10 percent of the ordinary shares in a subsidiary for twelve successive months amid a two-year period before the transfer, the holding organization can discard these shares without any tax obligation, however, it is mandatory that such holding company and its subsidiary be active for 12 months before and after the disposal.A holding company may also be free from tax obligations if it majorly carries out functions such as:

• Disposing of shareholdings in subsidiaries.
• Defending itself and its subsidiaries from takeovers.
• Receiving dividend payments from these shareholdings.
• The acquisition of shares in subsidiaries.

HMRC doesn’t see these activities as 'taxable '; along these lines, any holding organization that works with these fundamental capacities alone won't be required to pay for VAT. It is impractical for this kind of holding organisation to intentionally enlist for VAT; on the other hand, if the holding company gives, or means to give, taxable supplies to a subsidiary, it will be allowed to deliberately enrol for VAT. Necessary VAT enrolment will apply if the yearly taxable income surpasses £82,000 (2015-16).

• Can I use the word ‘holding’ in a company name?

Modifications were done on January 31st 2015 to the guidelines for business and company names. The word "holding(s)" is no more thought to be 'sensitive'; as a result, you may use this word to register an organisation name.

• How do I register a holding company?

A holding company can be set up in the very same manner as some other privately owned business limited by shares – you should legitimately join it with Companies House and stick to strict statutory recording prerequisites. Your Company Formations provides a variety of formation bundles online for enlisting an organisation limited by shares in only three hours. To register another organization on the web, you will need to give the accompanying data:

• Name of Company
• Official office address
• Details of at least one director
• Details of at least one shareholder
• Articles and Memorandum of association
• Share capital – details of issued shares
• Documents to support the use of certain sensitive words in the company name

You would electronically submit your application form to the Companies House. If everything is properly done, your new organisation will be enlisted in just 3 hours and a confirmation will be sent to you via email along with digital documents to affirm the incorporation of your company.

Could you possibly be thinking of establishing a Private organisation, limited by Guarantee? This article addresses the necessary requirements to begin the LLP company.When you are contemplating establishing a firm, it is critical to consider the kind of structure that you pick when you enlist your firm. Without a doubt, Limited by Shares Companies are the most popular type of Company structure known.It offers organisations the opportunity to look more professional and gives the opportunity to have unlimited shareholders.Be that as it may, it is essential to think of the kind of structure that would best suit your kind of business, not what is the most well-known choice. It may be worth weighing the advantages against that of another business structure – this case being a LLP (Limited Liability Partnership).

Definition

The essential meaning of a LLP is a partnership company with at least 2 individuals. Flexible terms of partnership are offered to this business type as well as taxes. It also has its own legal identity thus, if the business were to go bankrupt, the members’ private assets are protected.There are some amazing advantages of registering your firm as an LLP.

The Limited liability of its members

The title is somewhat of a giveaway truly, yet an LLP truly does provide some extremely flexible conditions for its members. This incorporates various distinctive things including:

• Without major hurdles, members can leave when they want.
• The liability of members are limited, hence the firm is a Limited Liability Company.
• By and large, an LLP provides less rigidity in modifying its internal structure.
• This can be extremely helpful as far as setting up rights, obligations and the formula to use when disbursing profits.

Tax Breaks

Members of LLP are not taxed in the same manner as members of other companies.

• LLP individuals are tagged as self-employed. This implies that National Insurance commitments are fundamentally short of what it would be in a Ltd company structure – where shareholders are tagged as “employees”.
• There are more chances to become eligible for Entrepreneurs' Relief as a Limited Company member than there are as a shareholder in organization.
• There is a higher probability of becoming eligible for Business Relief as a member of LLP.

Allocation of profits

As expressed before in this blog, one of the primary advantages of having an LLP is that it gives more room for flexibility which incorporates the way profits are disbursed to all members.

• The accommodating nature of LLP terms enables easy modification of things, as long as all members are in support.
• This also involves the allocation of share capital and profits which is somewhat easy to do.
• Conversely, a customary limited by shares structure is a great deal more inflexible and any huge modifications must be approached in a formal manner and delivered to the Companies House.

It can be useful for particular ventures

Numerous professional organisations structure themselves as an LLP – undoubtedly an extraordinary number of auditing firms, law offices and other professional organisations will form as an LLP. There are unquestionably solid foundations regarding why this is the situation.As indicated by The Brazilian Chamber of Commerce in Great Britain LLP:"is currently utilised for budgetary administrations and fund management business. It can be organized to give the administration obliged, whether close control or free regulation, and specifically it can accommodate the distinctive profit and bonus programs found in these sections"Undoubtedly, some non-profit organisations may think of an LLP plan to be better when they intend to go into a sort of joint business with an outsider. So in the event that you feel that your business may fall into any of these levels then it's definitely worth considering when forming your organisation.

Points to Consider

1. A registered office address should be provided

The registered office address will serve as the official physical location of the establishment and this is where all documents concerning the organization will be delivered to. It must be located within the United Kingdom; however, neither you nor your organization is mandated to have that address as your base – all you are mandated to do is to obtain the permission to use said location from the administrator or owner of the address. The location is usually available on public records and as such, most people prefer not to make use of their home address.

2. Add a director

• The person in charge of the daily activities of the organisation is the director. Companies Limited by Guarantee needs a minimum of one individual to work as the director. For every director of an organisation, the following information has to be provided:
• Name
• Date of birth
• Nationality
• Occupation
• Town of birth
• Colour of Eyes
• Service address – just like a registered office, this would serve as the official address of the director, which could be made public.
• Phone number
• Residential address – not to be publicised

3. Appoint a member

This is similar to a shareholder; however, the term shareholder is not applicable in this case because there are no shares. At least one individual who could also serve as the director is needed. This implies that the company can be established by just a single individual. For every member, the following information is required:

• Name
• Phone number
• Town of birth
• Service address
• Colour of Eyes

4. Appoint a secretary (optional)

If you wish to employ or appoint a secretary, it is acceptable; however, it is not mandatory. If it pleases your company to employ the services of one, the following will be required:

• Name
• Phone number
• Town of birth
• Service address
• Colour of Eyes

5. Upload your own memorandum and articles?

That is it as far as the data that you have to give… unless you decide to upload your articles and memorandum – these refer to the files that state how the organisation is to operate. It's significant that we do of course give our own files that suit the lion's share of companies. The second to the last step in the formation process offers you an opportunity to upload yours.

6. Check over everything

Every data provided by you can be crosschecked in the summary page. If modification(s) are required, select ‘change’ next to the pertinent area. When you’re satisfied with everything, select ‘Submit’ – your request to create a company will then be forwarded to Companies House. At the point, an average of 3 hours is required to form the company after which an email will be sent to you confirming the formationThat is it; all that you have to give to establish a Company Limited by Guarantee. With this, you should be able to start-up your own Limited by Guarantee Company.

Dissolving your limited company is the only way you can legitimately relocate your company outside the UK. In this case, the country where yo wish to relocate to must have your company registered in all it relevant records.An alternative will be to use the name of the existing company to open register a company in another company. This is legal because both companies are part of the same group. It will only take time and money, but it is achievable.However, it is good to know that neither of these is required for you to continue trading with your existing UK firm outside the UK because the operations of your company can be done wherever you like. As a matter of fact, at any location in the world, a company based in the UK can transact its business.This occurs more often with larger organizations with branch offices, hotels and shops in different countries. This is of high benefit to those company owners who wish to relocate but do not want to lose close down an established business with high client base. It is also useful for people who do not wish to restart the rigours of establishing a new firm and growing it.

Tax treatment of UK company trading overseas

If your firm starts doing business outside the UK, there will be tax implications.In reality, any office of an organization with its initial or head office in the UK will be regarded as an extension of UK trade. This implies that there will be some tax implications for your business:

• Every firm registered in the UK is mandated to pay 20% corporation tax on every gains and profits generated in the UK and beyond.
• Trade activities outside the UK can result in taxable presence in said place if you posses a permanent business facility there or you are concluding contracts at the moment in a country where you reside permanently. If this is the case, you have to register your firm with the appropriate authorities in said country.
• When profits are taxed both overseas and in the UK, double taxation relief is offered.
• This relief however, is dependent on the amount of UK tax on your profits made outside the UK.
• Losses made on trade outside the UK could be relieved against the profits made in the UK.
• As regards plants and machinery bought outside the UK, the UK capital allowances are made available.

Tax treatment of non-UK resident directors and shareholdersThere will be tax implications for income received from your company if you spend 183 days or more in a tax year outside the UK:

• If you are a director, you will still be employed because the company is still a UK registered company.
• A personal tax will have to be paid for every income received from while working in the UK, even if it is just a board meeting; but, the tax free personal allowance of £10,600 (2015-16) is still accessible by you.
• Your firm will still have to be registered for PAYE if you are still obliged to pay National Insurance and personal tax in the UK.
• On every income received from the UK, you may still be required to pay National Insurance Contributions.
• If your country of permanent residence has a double taxation agreement` with the UK, you will be able to claim tax relief on your income received from the UK.
• Asides the notional 10% tax credit, you will not be required to pay any further tax on dividends receives on shares in a UK company as a permanent non-resident. This is as a result of the fact that the company would have already paid the corporation tax on the money. Under normal circumstances, the money you can receive and keep is the net sum of the issued dividend sum.
• If you are liable for income tax in the UK, a self assessment tax return will still be required of you to be filed stating your dividend income. You have to report it even though you won`t be taxed on it.

Am I a UK resident or non-UK resident?The amount of time you spend in the UK during a tax year will determine if you will be liable for UK tax on foreign income.The amount of time spent within the UK during a tax year (6th – 5th April) determines your status as a UK resident.

• Automatically UK resident:

If you spend 183 days or more in the UK within the tax year.Your only home is located in the UK – you are required to have lived in a your own or rented apartment in the UK for at least 91 days. It is also required of you to spend at least 30 days there within the tax year.

• Automatically non-resident:

If you stay in the UK for a period shorter than 16 days; however, if you have not be classified as a resident of the UK in the last 3 years, you will not be classified as a resident if you spend less than 46 days on your current stay.If your full time work is outside the UK (minimum of 35 hours/week) a period shorter than 92 days is spent in the UK an out of which not up to 31 days are spent working.At you initial travel outside the UK, a split-year treatment will be adopted for you. The first will be non-resident while the second will be resident. Based on the time you spent in the UK during the tax year, the UK tax on foreign income is what you will be liable for. This will directly be applied via PAYE when your Self-Assessment tax return is filed.

The use of virtual offices has been very popular for more than a decade now.Office rentals of this type have been invaluable, especially for entrepreneurs and SMEs who decide to start a business.Here are some tips when renting offices like this:

Location

Choose a virtual office that is located in a populated area easily accessible to your customers, partners and employees.Look for a building that is attractive, as this will boost its corporate image. Check the quality of the training rooms and boardrooms. Do not be swayed by images of websites; check the condition of the company offices.

Space

It is important that you evaluate specific areas of the rental company offices and choose professional space that will impress partners, customers, suppliers, and prospects. Generally, companies will offer offices for rent, as well as a few hours of meeting rooms and training rooms per week.

Availability

If the firm has rented virtual offices to other businesses, you probably do not have the use of training rooms or meeting rooms. If this is unavoidable, you can opt for a satellite assembly that can be used for meetings.

Ability to Publicise

Another thing to consider when renting an office is the right to use the e-mail. You want to be able to announce the address on your web site and promotional materials. Ask about the fees the firm charges for this. Some companies renting virtual offices also offer the use of a tax direction.One of the most important tips for renting office of this kind is to verify if your company logo can be placed in the lobby or waiting room, as this will be an important element to highlight its corporate image. You may have to pay an additional fee for this item.

Amenities

One of the basic things you should consider when renting virtual offices is if you are offered parking spaces for your customers or suppliers. Ask about the use of community office equipment (fax, photocopier, wireless Internet, scanner) and basic office supplies. Check whether the boardrooms and training rooms come with video equipment and furniture.Check the rates to rent offices via the Internet. Today, there are rental companies renting furnished offices and virtual offices that offer high quality and are easily accessible through internet rates.

Virtual Offices Indispensable Tips

When you do not have the economic infrastructure to start your business, you should not delay the launch of your company. Look for a better option in virtual offices.The office rent is an excellent choice when opening a business because of its indispensable class facilities, personalized attention, and services included at a low cost.The high cost offices pay in rent has impeded growth and the opening of new businesses and SME companies. The opening of new property markets has developed and promoted the use of new concepts that reduce the economic cost. These properties are virtual offices.It is estimated that a large percentage of new entrepreneurs have promoted and increased their return on investment income from virtual offices. In the case of the United States and Europe, virtual offices for new businesses or companies are not a new concept.According to experts, it is believed that entrepreneurs spend 50% or more to rent offices equipped and furnished. Traditional buildings are old-fashioned, especially if what you want is success and ROI.One of the main reasons why a SME does not survive the first year of life is operating expenses. Conditioning or adapting a rental office building represents indiscriminate spending to increase corporate business image.Did you know that? Through virtual offices, you get an equipped and furnished business centre at a low cost compared to traditional offices. Providing a business address in London without actually renting office space will provide an excellent corporate image on the web, personalised attention to its customers, and will focus the budget.Through the rental of virtual offices, entrepreneurs can improve their economic situation and increasing job vacancies in certain sectors.Virtual offices get other optional benefits or services that are not included in your monthly rent. Some of the extra services offered by virtual offices are:

• Receiving phone calls
• Correspondence management
• Broadband Internet
• Maintenance service 24 hours a day, 365 days a year
• Rent per hour boardroom

In previous articles we've talked about the benefits a virtual office can offer; since we know that operating a physical office can cost big money, not just to pay the rent, but also to equip it. This may be an unnecessary expense, especially if your working model does not require a physical office.Today, thanks to new forms of communication, it is easier to run a business from anywhere in the world, even from home. For entrepreneurs this is one of the best options to start a business because they do not require you to pay rent, or telephone services, internet, electricity etc. because you already have them in your own home. However, although using this method of working can bring many benefits, primarily economic, you can also have disadvantages. The main one is that it can reflect an unprofessional image to your clients or potential investors.The use of virtual offices is not new, because in places like the United States and Europe, this model of work has been used for more than 15 years. But what makes this so popular among SMEs and entrepreneurs is that it can give you everything that a physical office gives, but without the office. In the world there are thousands of companies that offer virtual office service, which will get benefits such as answering calls, managing your correspondence and mainly commercial and fiscal use of an address. Another advantage is that you have a choice between hundreds of prime locations.

• How to know if a virtual office is what I need?

This is one of the most common questions among entrepreneurs and small businesses. If what you want is to give formality to your business without the need to spend large sums of money, then a virtual office is the best option, since the monthly cost of a virtual workspace is usually between £40 and £200. The price will depend on what your business needs. It`s just a matter of comparing between all options offered by the current market.If you started with a physical office you can also step into a virtual office, you only need to identify your working method, how much time you spend in the office; you need to have a physical space in the right place to reflect the image you want. The reason is because even a space that is totally yours, if not located in the correct place or not equipped properly, will simply not give the necessary confidence to your customers.This is where the use of a virtual office again comes in. As most of the business centres allow you to use their facilities as a meeting room so you can have meetings with your customers, imagine the image you will reflect when your clients cites a major corporate building, this is something most business centres can offer you.

• Virtual Office: No more traffic to get to work

The big problem we suffer daily in virtually every city in the world is the problem of traffic, which makes your daily commute time last longer than an hour or even more. This doesn't even take into consideration the extra time it may take if there is any construction on our way.This has been one of the main reasons why many professionals, entrepreneurs, small and medium enterprises have chosen to use virtual offices. There are many success stories where people work mainly at home or in public places like cafes and do not require a traditional office, but the services have commonly, this is the perfect case for using virtual offices.That's why we emphasise the use of this model business for a decade has grown by leaps and bounds around the world, allowing you to have a secretary, a physical address, receiving mail and even allows you to use the facilities if required. And best of all is that a virtual office will cost up to 90% less than physical office and with the same services.If you work alone or you usually do at home, the best option is to hire a virtual office because it will allow you to continue working from anywhere you want but with the assurance that someone will be able to take your messages and answer your customers` calls. Plus they have an office which gives a much more professional image to your business and help you close more deals with your customers.The business trend of the past year clearly showed that thousands of people have started opting for virtual offices, as currently, there are dozens of companies` business centres that offer this service, many of which have offices in major cities, so it is certain that there will always be a virtual office near you.

• Defining Virtual Office

Today, we have started this site which is dedicated to providing the most useful and relevant information about virtual office, this site will find everything related to business centres around the world.The definition of virtual office can be described as a virtual and intangible place which business tasks are carried out as if it were a physical office. Mainly virtual offices are focused on serving customers, i.e. a virtual office can offer products and services without the use of traditional media, which can be much more efficient, since customers can access the information or services 24 hours a day.What is a virtual office? Virtual offices are mainly focused on multinationals, medium and small enterprises as well as for professionals and entrepreneurs who want to reduce costs and have an address for their company or business. Virtual offices are very common to have a presence in several places, without the need for a physical space, which often tends to be very expensive.One of the great advantages in addition to those already mentioned, is that you run a business from anywhere in the world, with a virtual office and have a place where your customers can communicate without the need to use a virtual office. Currently, virtual office service can be hired at much lower costs compared to maintaining a physical place.Today, there are thousands of companies of services such as business centres that offer virtual office packages to suit the needs of their customers and many of them allow you to make use of conference rooms and physical places to receive your customers.Undoubtedly, choosing a virtual office if you are starting with your business or if you want to have presence in other cities is a major move. This is because it can help you reduce cost to the minimum compared with a virtual office.

For every entrepreneur, having a space to host your business is an illusion. Hang the pictures, choose the furniture, paint the walls in order to cut the opening day ribbon, all ready to have an office to begin operations. But often this dream is truncated by the high costs of starting a business independently. Sometimes up to 50% or more of the capital is intended to take renting a property and condition.The good news is that there are virtual offices; a service that enables the entrepreneur to start professionally without sacrificing their money, as they are within the reach of almost any budget. And the best thing is that they are suitable to perform all kinds of activity, from coaching, psychology, design, accounting, architecture, freelancers and projects from home, to production and marketing of goods and services technology.But how does this tool work? This is an office like any other, only without a physical space in a building. That is, you have a tax and business address to receive your mail or print on your stationery and business cards. You also have a private number and the services of a secretary who answers your phone with the name of your company, takes messages and connects calls to your mobile or home to stay in touch with your clients at all times.This scheme is ideal for entrepreneurs who want to start with a recognised image, luxurious facilities and professional care service at a competitive cost. It means you can spend 100% of your time to do business and not worry about the operational tasks involving an office, like paying the electric bill, telephone or water, and salary and training a secretary.

The advantages of the virtual office model

Many professionals spend more than 90 minutes to reach their workplaces, causing stress and damage physical and mental health. Nobody likes to be in traffic, and this model can go to any of the resorts to perform your tasks, reduce travel times and leave you free space on your schedule to take care of other tasks. Another added value of belonging to a virtual office is that the networking is done with other users. Users can interact and do business with each other, provide a service or create strategic partnerships that benefit both parties.Using this format of work (both virtual and physical) is an alternative for companies that suffer a disaster, unforeseen or emergency. So you can move to a productive workplace and resume operations immediately, as all offices are always ready to work. Therefore, business continues without interruption. Even some providers of virtual offices manage benefit programs for its clients by means of a card. This not only identifies them as members of a circle of business people around a workplace, but gives them discounts in various establishments such as restaurants, gyms, entertainment or clothing stores.Renting a virtual office can represent savings of 54 to 90% for micro, small and medium enterprises (MSME). Riding a traditional office entails expenses for salaries and legal benefits for employees, plus payment of electricity, water, telephone, etc.While each provider handles packages based on the services offered, the reality is that all the offers are customised specifically for each customer, so that you only pay for what you need. The scheme adapts as you grow and, at the moment you can choose if you want you to add or remove services and migrate to other forms of work.Lots of people begin by renting a space with perhaps only a couple of desks and can then move up the ladder to occupy more office space, some businesses might start with just a registered address, giving their company a central London address. The virtual office enables you to grow at your own pace, so eventually in a relatively short amount of time, you could think about settling independently with your own office.The flexibility of this model not only benefits SMEs and entrepreneurial rookies. The big companies also use it to expand its presence nationwide or have offices in major cities throughout the country without investing much capital.For more information about virtual spaces and business news, visit the Your Virtual Office Blog today.

Just like an individual person, limited company is separate entity in eyes of law, so one cannot simply takeout the money from the business account as if it was their personal bank account. Legally the company is the owner of all the finances, so certain procedures must be followed to withdraw money from the business. It can be done by four ways: director`s salary, director`s loan, dividend payments and reimbursement of the expenses. Correct channels should be used for transferring all finances and they must be recorded accurately in the accounting records of the company.

Director's Salary:

As director of limited company, one can pay himself regular salary via PAYE. In order to do this one must have his limited company registered with the HMRC as employer. The income tax and the NICE may get deducted for every pay period, depending on salary one pays himself. Company will be required for this payment to the HMRC on a monthly or quarterly basis. The salary payments are tax-deductible expense so there won`t be any liability of Corporation Tax on this money; but the Employers National Insurance contributions will have to be paid on the salary.Many of the company directors give themselves salary up to lower profit limit of NIC which is £8,060 for 2015-16 in order to avoid paying the Income Tax and also to minimize the NIC liabilities, while remaining qualified for state pension and the benefit entitlement. One can also pay himself salary up to the annual Personal Allowance (tax-free) of £10,600 for 2015-16. This means one does not have to pay Income Tax on the salary but the NI liability will be slightly higher. The remainder of the income may be taken as the dividend payments for shareholder.

Shareholders` dividend payments:

You can decide to leave the surplus income in the company in order to further aims of your business. You can also take the share of profits of the business as dividends. The dividends are paid in accordance with the value and number of your shareholding. In case you are a sole shareholder in your company, you will be entitled to all the remaining income after deducting expenses, costs and tax liabilities of business.20% Corporation Tax is payable by companies on all the taxable income. The dividend payments are from profits after tax; there personal tax or the NIC are not payable on these dividends in case the total income is below £42,385. The figure may be achieved by paying yourself:

• £8,060 director`s salary and £34,325 dividends; or
• £10,600 director`s salary and £31,785 dividends.
• £8,060 is NIC threshold and £34,325 is Personal Allowance threshold

The mentioned figures are applicable to tax year 2015-16 (6th April 2015 – 5th April 2016)In you want to pay more to yourself; you should get higher dividends instead of higher salary as tax rates on dividends are always less than rates of Income tax. In order to pay dividend, a board meeting must be held and minutes should be taken, even if there is only one shareholder and director. In such cases, You only need to mention that you issued yourself dividend on a particular date, and you should keep the dividend voucher in order to show the details of payment.

Director's Loans:

You can also remove the money form your own company as director`s loan. The method may be used in order to lend money to the company, borrow money form the company which exceeds the amount which you put in company, or to reclaim the money which you previously put in the company. You should keep a record of such loans in the Director`s Loan Account and show it as part of the balance sheet of company.In case you remove the money from your company which exceeds amount you have put in the business, the loan account will be overdrawn. It is treated as benefit in kind. There might be some tax implications for your company and yourself. If you are owed money by your company, your loan account will be in credit. Money which is available may be taken out at any moment without tax implications as you will simply be reclaiming the money which you had put in your business.

If your company is owed less than £10,000 by yourself:

• You must declare loan on your Self-Assessment tax return.
• You might have to pay the Income Tax on interest due on loan.
• Class 1 National Insurance must be deducted by the company on your loan.
• Outstanding amount of loan must be shown on the Company Tax Return.
• The section 455 Tax will have to be paid by the company at 25% of overdrawn amount.

In case the loan is not repaid and is written off:

• Class 1 NI must be deducted by your company through payroll.
• Income tax must be paid by you on loan via Self-Assessment

Profits for the companies limited by guarantee:

The companies which are limited by a guarantee are normally setup by the non-profit organizations. They can also be set up by the profit making businesses. Such companies don`t have any shares or the shareholders. The surplus income is usually put back in business in order to promote and to achieve the non-profit goals of business. In case the company is not non-profit, the money can be removed from business as loan, salary and expenses. The payment of dividends is not applicable.

Can I continue to take salary in the current job if I set up a limited company?

One can be self-employed and employed at same time, therefore, one can continue receiving salary in the current job while managing and owning his own limited company as director and shareholder. Indeed, a lot of new business owners have to stay in the employment until they have suitable income from the business profits.Any money one receives from the company in form of director`s salary or/and dividend payments of shareholder`s should be included in the gross annual income for the purposes of taxation and one Income tax and the NIC must be paid in accordance with the combined income of both jobs. Such accounting can be time consuming and challenging, so one may wish to get an accountant.

Working out the Income Tax and the National Insurance Contributions:

There will be a requirement for you to prepare as well as file your Self-Assessment tax return annually. It should include the details of salary, expenses and benefits received from employment and also the salary, benefits, expenses and dividends received from you company. Second tax code will be issued by HMRC for income tax which you receive from company. Tax code for the existing job is most likely to remain same.As employee in your present job, your Income tax and the Class 1 NI will be paid through PAYE. Your employer will deduct it from you salary before paying it to you. You will need to work out amount of the income tax and the NIC which you owe on income received from the company – this is for the Self-Assessment.Class 2 and the Class 4 National Insurance might have to be paid by you. The Class 2 NI are charged at flat rate £2.80/ week, and Class 4 NI can be worked out as percentage of the self-employed profits, so this amount will be determined at end of tax year, when you will complete the Self-Assessment tax return. You might be permitted deferring some Class 2 or/and Class 4 NIC in order to avoid overpayment through the self-employment.Your Virtual Office London have helped form many thousands of companies for our clients over the past 4 decades. If you need help or advice on your business or start-up please contact us today.

A shareholder is a beneficial owner of the limited companies. Shareholders invest in companies in return for the equity shares. It allows them to vote on management and the direction of business. It also allows them to receive portion of the profits with relation to the percentage of their ownership. Shareholders also have a responsibility to contribute according to value of their shareholding, in case company is not able to pay the creditors. A number of small companies have only a single shareholder and he is mostly the sole director of company as well. Alternatively, there can be many directors and shareholders of companies, who might or might not be same people.

What is the difference between Shareholders, members and subscribers?

Subscribers are the first shareholder in company as they add or subscribe their names to memorandum of the association during the process of company formation. By doing this they agree to form and become a part of company by taking at least one share.The shareholders are also known as members. It doesn`t matter if they join the company during incorporation or after it.The subscribers usually have the same rights as those people who become the shareholders after the formation of company. It is determined by the percentage of their shareholding, the particulars of the rights attached to the shares, and terms of the shareholders` agreement which was drawn up.

Responsibilities and rights of shareholders:

The shareholders do not participate in the day to day running of the company unless they are directors as well. Only when the directors don`t have authority to make decisions, the shareholders will make the decisions. Typically, following are the responsibilities and rights of shareholders:

• To take at least one issued share in the limited company• In case the company is not able to pay the creditors, shareholders agree that they will contribute value of the share which they own. It is called limited liability.• Having power to change name of company.• Having power to change structure of company.• Appointment and removal of directors.• Granting the rights and the powers to the directors of company.• Issuing shares after the formation of the company.• Transferring the share they own, to some other people.• Changing the particulars of the rights attached with shares.• Approving the substantial investments.• Receiving the profits of company according to the value and number of the shares they own (dividends payments).

Can a shareholder also be a director of the company?

Shareholders can be appointed the directors of the company if they are 16 years of age or more. A number of companies are owned and managed by single person serving as both the sole shareholders as well as the sole director.

Can one company hold share in another company?

The limited company shareholder may be individual person or any business entity such as a partnership, an organization, another company, etc. These non-human shareholders are known as corporate shareholders. There will be a representative who will be appointed in order to act on the behalf of corporate body. He will attend the general meetings, exercise the voting rights, sign resolutions, and will perform other shareholder duties as well. The position is usually held by director of corporate body.

Benefits of corporate shareholder:

Number of benefits may be provided by the established corporations. As they have greater influence, resources and experience from which smaller businesses can benefit. The established corporations can provide the capital in order to buy equipment or to help the business grow. These large companies often have good established relationships with the suppliers which can provide the small business with better bargaining power. The involvement of such established corporations can have a positive influence on the other firms, lenders and investors to have business relationships with smaller company. They can also offer some valuable expertise in the corporate governance, branding, strategy, research and market trends, investment, legal matters, economic growth and sustainability.

Important points:

• In case corporate shareholder owns above 50% of the companies issued share capital, It will become the holding company or parent company with the majority control. Other company will then become subsidiary of this corporate share holder.• In case you sell large amount of hares to some corporate shareholder, the non-corporate shareholders who have smaller shareholdings might get overpowered by majority votes of corporate shareholder.

Can a new shareholder be added after the formation of the company?

After the formation of company the limited companies may bring in new shareholders. This can be done in two ways. The ownership of the existing shares may be transferred from present shareholders to new shareholders; or additional shares might be issued by a company in order to sell to the new shareholders.It is easier to transfer share than to issue new shares, but it will depend on whether there are any share available for transfer.

Are the details of shareholders displayed on public records?

Names of all the shareholders of a company are displayed on the Companies House`s public record. It is required from the subscribers to give the full name along with contact address to the Companies House. Those shareholders who join after the incorporation of the company only need to provide the name. The details of the issued share capital of the company are also disclosed on the public record.In case one prefers to keep his name off public register of the companies, he may protect his privacy by appointing a nominee.

What is shareholders agreement?

The shareholders agreement is recommended highly for limited companies that have more than single shareholder, however, it isn`t a requirement of law. It is a legally binding agreement between the shareholders which expands on general contents of articles of the association by defining responsibilities and the specific rights of shareholders, how the company is to be managed, and how the decisions are to be made.It is a very effective way to make sure that all the members are protected equally and they are aware of the rights, obligations and restrictions in all the circumstances. Exact contents of the agreement may vary considerably from one company to another, but it is the principal purpose of this document to prevent conflicts among shareholders, and the protection of interests of the minority shareholders against voting powers of the majority shareholders.

Important issues covered by the shareholders agreement:

• The distribution of the profits of company – directors loans, dividends, and reinvestment in company.• Appointment and removal of secretaries and directors.• Restrictions and rights of the company directors.• Salaries of directors.• The prescribed particulars which are attached to the shares.• Restrictions and procedures when issuing and transferring shares.• Financial matters – loans, overdrafts, equity investments, etc.• Protecting the rights of minority shareholders – For example: such company decisions which require the unanimous agreement of all the shareholders, not only the majority vote.• Changing the structure or nature of business.• Guidelines for dispute resolution.• Guidelines for the legal proceedings.• The information rights of the shareholders.

The shareholder agreement is confidential and private document – It is not displayed on the public record. It may be drawn up by solicitor before or after the formation of company, and the shareholders can alter it at any time. There are no specific rules regarding where the document should be kept.