Guide

Starting your own business is never an easy task and even with all the information and technology available to us now (that would make someone from 20 years ago exclaim with glee had they had access to these things in order to create a business back then), it’s still not enough to keep you competitive without a solid plan. Of course, you’d want your company to be the best place to work in the world but that’s easier said than done. Building a reputation online is not only necessary to have a fan base, but it’s also like a double-edged sword where online users on social media can criticize you for any reason and you have to protect yourself from defamation.

As if that’s not complicated enough, the need to constantly increase the value of your sales will definitely challenge your knowledge and skills, as you seek to ensure that you can accumulate the funds needed to expand your business and go global in the next 5 years or so. This may seem overwhelming to you, but there’s always a silver lining in your grey skies and here are some tips to start a small business successfully.

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Table of Contents

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• Start with a Solid Plan

• Begin Networking as Soon as Possible

• Surround Yourself with the Right People

• Stay Ahead of Everyone Else

• Maintain a Balance Between Work and Life

• How to Avoid Startup Failure

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1. Start with a Solid Plan

Nobody goes into war without a plan and starting a business and war is similar according to the author of The Art of War, Sun Tzu. You have to craft a business strategy and write it down to something called a business plan. It basically details how you’re going to run the business and make a profit in a given amount of time. You need to lay out the short and longterm goals for your business and it involves how you’ll start the business (i.e. who will be in your team, where you’ll borrow capital, what will your product/service be, your target demographics, how you’re going to get sales – the short term goals).

On the other hand, your longterm goals will include how you’re going to grow, expand and scale up your business. For example, if you started out in Liverpool, then make sure that 5 years later you’re ready to do business worldwide! Keep in mind that you can always make adjustments with the business plan in order to keep up with the trend.

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2. Begin Networking as Soon as Possible

Today it’s business suicide to not build a professional network. There’s hardly a modern business that doesn’t do networking. Networking enables your business reach new heights unlike companies that have existed prior to the internet and social media (with a few exceptions like the Dutch East India Company). Word-of-mouth marketing has never been stronger.

With former company insiders and very diligent researchers exposing some scandalous work of companies over the years, 88% of people today trust reviews from online consumers more than official statements from companies or the government. It is the same when family and friends recommend to them which brands to buy or news media to watch. You have all the right reasons to start networking now.

Networking will also increase your chances to connect with highly talented individuals, which can be very beneficial to you in the long run. Large corporations tend to have the best inhouse talent and that’s because they jealously guard it like a big secret or something. Often times these talent never see the light of day in the open market, because the big companies only headhunt them, then keep them shelved until they have some use for them.

So where do you actually begin?

Well, LinkedIn would be the best place to start networking with professionals and join groups there. In case there are some local dedicated networking events happening, then that’s also a good chance to do networking.

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3. Surround Yourself with the Right People

In battle it is the general who commands his army and the same is true for you and your company. Your role is to lead and you need smart and competent people around you to translate your orders into actionable goals. You’ll also need mentors and strategic partners as you grow in the first 5 years in the business (this is why many companies fail, because their leaders didn’t undergo mentorship training). Gather your lieutenants (supervisors) and make sure each soldier (employee) are competent enough to complete basic tasks.

Hire the right people, fire people who do not contribute, reshuffle your organization to achieve better results and learn the art of shifting your business strategy to meet new challenges.

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4. Stay Ahead of Everyone Else

The second best always tries hard to catch up with the winner, so do not be the second best guy in the business. Watch out for and keep up with the latest trends in order to stay in the lead. If necessary, appoint a special team to do this specific task and then have them meet with you and your marketing team to plan your next move to leverage from the new trend. This way you will always outpace your competitors and leave them chasing you and not the other way around.

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5. Maintain a Balance Between Work and Life

Never kill yourself for profits, if you still don’t get why it’s very important to have a work-life balance, then you haven’t been paying attention on how some people lost the love of their loved ones because they preferred to make money than spent time with them. It’s good to see your dreams come true when it comes to personal success and financial security, but do not forego your family, friends and co-workers – they are an essential part of your life and you need them. So build meaningful relationships and be a leader with a heart to them.

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How to Avoid Startup Failure

It’s a known fact that 90% of startups fail within the first 5 years of their business operation, so it may be a good thing to plan ahead and anticipate hurdles that would lead you to failure in order to avoid them promptly. While you can use these tips we’ve presented here in this article as your guide to success, remember that there are no guarantees to success. In fact, you may wish, pray or hope to get lucky because that’s some form of guarantee; however, the best thing that you can do is to hope for the best and prepare for the worst. With time you will also gain experience plus the mentorship you’re receiving will be a big help in your business’ survival.

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It’s very likely that you will setup your first business as a sole trader, which indicates that you are basically self-employed. But after trading for several years, it is only logical to create a private limited company, especially since you should probably now have the financial resources to do so. The formation of a limited company (Ltd) is quite straightforward; however, you must also be aware how your legal position, financial arrangements and other responsibilities will change dramatically from when you were a sole trader.

Small business owners, contractors and freelancers can benefit much from creating their own limited company. In this article, you will learn all about limited company formation plus additional information on how to run this type of business. If you’re confused about the potential benefits and implications of starting a limited company, this guide is for you. This article will enlighten you on how a limited company can save you time and money, and will show you how to setup a limited company online.

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Table of Contents

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• What is a Limited Company?

• Why Set up a Limited Company?

• When Should I Change from Sole Trader to Limited Company?

• Can I Set Up a Limited Company on My Own?

• The 7 Steps to Setting Up a Limited Company

• How to Register a Limited Company

• How Much Does it Cost to Register a Company?

• What Taxes Will My Company Pay?

• How Long Does it Take to Set Up a Limited Company?

• How Will I Get Paid Through My Limited Company?

• Legal Responsibilities of Running a Company

• Year-End Reporting for Your Company

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What is a Limited Company?

The term “limited company” refers to a business organization that’s considered as a separate entity (legally and financially) from the individual(s) managing this business organization (e.g. the company’s board of directors). The reason why this kind of business structure was created is to allow business owners to have limited liability. By contrast, when you register your company as a sole trader, when your company is sued for whatever reason, it is you who will take the bulk of the responsibility of that lawsuit and nothing will be protected from the government seizing even your personal assets when you lost the case.

On the other hand, if your business is a limited company, you are only liable for the face value of your share in the business and the judge cannot order for your personal assets to be siezed as it is not part of the company. A limited company has one or more directors (having more than 2 directors are called board of directors), may have one or more bank accounts, has its own tax designation by the HMRC, can be auctioned or sold as an IPO (initial public offer) company shares, and is required to be registered with Companies House.

Why Set up a Limited Company?

Most of the benefits of setting up a limited company is already mentioned above and the last advantage of having a limited company is that it allows you to pay a lower tax rate compared to a sole trader company. This means you will save more money for other company projects, or pay out dividends to your shareholders.

When Should I Change from Sole Trader to Limited Company?

Creating a sole trader business has its own pros and cons (usually it has lesser pros and more cons) like testing how your business model will work against the real world market and refine it. Among the benefits of being a sole trader includes no registration fees, little to no administration work, and you can make decisions without having to consult with your board of directors or shareholders. Meanwhile, the cons include sole trader tax is categorized as income tax and not corporation tax, which means its a higher tax rate than corporate tax, plus all business debts is your personal responsibility (meaning you have full liability).

Therefore, it makes more sense to form a private limited company instead of keeping your sole trader business, as your revenue grows.

One advantage that forming a limited company is that you can find more ways to finance your business. As a limited company you can get private equity funding (i.e. selling shares in your business), whereas a sole trader business can only get business loans from bank. Also being a limited company you can do either or both.

Can I Set Up a Limited Company on My Own?

Companies House allows individuals to set up their own private limited company even if they’re the only employee and director of their company. This is a safe bet for contractors because it limits the risk of their clients treating them as regular employees and find loopholes in their tax and legal obligations. It also keeps contractors safe from the legal ramifications if and when they are sued by their clients. Contractors can also outsource their company administration to an umbrella company in order to save time, energy and resources.

The 7 Steps to Setting Up a Limited Company

Below are the steps you need to take in forming your private limited company.

1.) Check it’s right for you

Decide which business structure suites you best, limited company or sole trader?

2.) Choose your company name

The company name you’ll chose for your limited company will be your company’s legal business name, therefore it must be unique and must bear no resemblance to other existing company names. Your company name must not make false implications (i.e. imply regulation or approval by a body where none exists) and must not contain any offensive words. You can also operate your business under a different name; however, you cannot include the suffix “Ltd” to this name if your business was not registered under this name.

3.) Appoint at least one director

Your limited company can have at least one company director (which can be you, typically), but it can also have more than one director. The job of the company director or board of directors is to vote on making important decisions for the company, follow their rules set prior to the launching of the business and filling the company accounts, as well as ensure that corporation tax are properly remitted to the HMRC.

Though not required, you may appoint a company secretary. The company secretary would be the enforcer of the board of directors and he or she ensures that their decisions are carried out all over the different departments. He or she also makes certain that the company adheres to regulatory requirements and does all other administrative tasks.

4.) Decide who will be shareholders

Your company shareholders are those individuals who have financially contributed to the formation of your company. As the business owner you can be the founder, CEO and shareholder of your company. Another type of shareholders are the people who have purchased a significant amount of company shares that were offered as IPOs (initial public offer). Those that have huge percentage of the company shares becomes one of the company board of directors. A shareholder with more than 25% of the shares is a “person of significant control” (PSC) and will usually have the strongest voting power in the board. Some companies who have made well for themselves only sells less than 40% of their shares, thereby giving them the controlling interest of the company whenever the board of directors meet to vote on any crucial company decision.

5.) Create your company documents

Your limited company is required by the UK’s Companies House to have legal company formation documents that indicates how it should be operated. These are:

The memorandum of association

This is a legal statement saying that all initial shareholders have agreed in writing their will to form the company together as a group.

The articles of association

These documents lists all the company rules and regulations and how it should be operated, which is signed by shareholders, directors and company secretary. If this is your first time forming a company, you can find examples of articles of association and use that as a guide to create your own.

6.) Confirm what records you need to keep

Records keeping is also one of the requirements in company formation, which may include the company’s PCSs and all of its accounting records. Records must be kept for at least 6 years.

7.) Register with Companies House

The last step involves registering your company at Companies House (be sure to include your physical address when you do). Select the appropriate SIC code, as this specifies the nature of your business. Save time and effort by registering for corporation tax the same day.

How to Register a Limited Company

Go to the website of Companies House and fill up the company formation form, or you can also use the form IN01 and register by post. Should you decide to not use “limited” in your company name, then you must register by post. Typically, your new limited company will be registered within 24 hours after receiving your application (if done online). It can take up to 10 days for postal registrations to complete.

A 10-digit Unique Taxpayer Reference (UTR) will be mailed to the physical address of your company within a couple of days after your company has been registered. Your UTR is important, so keep it safe. The Companies House will also send you a ‘certificate of incorporation’, which confirms that your company is now in their records and that it legally exists. This document also includes the company number and date of formation.

How Much Does it Cost to Register a Company?

It’s very cheap to register your company online, just £12. It cost £40 for postal registration; however, Companies House has a a same-day postal registration option for £100, if you want your company formation to be fast-tracked.

What Taxes Will My Company Pay?

The UK government requires all limited company to pay corporation tax based on their fiscal profits. Companies House requires you to also register your company for corporation tax within 3 months after it has been registered and starts trading (you can register for both company formation and corporation tax at the same time). An actively trading company means that your business is providing services or selling its products and is receiving income or making profits. You can consult with your accountant if you’re not sure whether this applies to your company or not. But be informed that missing the deadline for filing corporation tax could get you fined, or worse, be sued for tax evasion.

You also need to file an annual company tax return to the HMRC based on the deadline they’ve set for your company. You’re also required to register for PAYE (pay as you earn) if your company gives employees and other individuals financial compensation (including your own as CEO or company director). Value Added Tax or VAT is also one of the requirements for your company to register with HMRC. Whether you provide services or sell products VAT will be calculated.

How Long Does it Take to Set Up a Limited Company?

Usually it takes about 8 – 10 business days for your limited company to be registered in Companies House, if you do it by post. Or you can work with us and we will fast track your company formation in a matter of hours!

How Will I Get Paid Through My Limited Company?

Compensating yourself from your limited company involves 2 ways.

1.) By taking a fixed monthly salary

2.) By paying yourself dividends out of the company profits (usually paid quarterly)

The best way to go about it is to choose both options, because you benefit through a reduced tax rate.

The greatest benefit of getting dividends is minimal tax due on them and they usually come in huge sums, because they are taken out of the entire company profits. But it takes 3 months at a time before you get paid dividends and there are no added benefits besides that. There are also drawbacks like if the company made negative profits, which will get you zero dividends.

On the other hand, getting compensated with a fixed monthly income will include other benefits such as state pension and maternity or paternity benefits. And on top of that you will get paid whether or not the company makes a profit because unlike dividends, your salary does not depend on the company profits. However, salary is considered as income and is taxed at a higher rate compared to dividends which is considered as capital gains.

Legal Responsibilities of Running a Company

True, while being the CEO and director of your company has its perks, it does not come without responsibilities and some are delicate because they have legal implications. Among them include managing accounts and giving notice to other shareholders whether or not you will personally benefit from certain transactions of the company. Of course, you may also hire a secretary to do these things on your behalf and cut down on the day-to-day grind – just keep in mind that the buck stops with you.

Year-End Reporting for Your Company

You are required to submit annual accounts and a confirmation statement to HMRC and Companies House every fiscal year. The UK government, as well as the company shareholders, investors, creditors and the general public need to know accurate information about your limited company and that it pays its taxes accurately as well. Consult with us if you intend to setup your private limited company.

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--If you’re set to launch a company limited by shares, it’s important for you to understand all there is to know about these limited company shares and what they mean for your business. Before you begin working via your prestigious registered office address, take note of the following information about limited company shares and be well prepared to own and overcome all of their implications.

The Definition of Shares

Shares represent a portion of a company that is limited by shares. They’re a divided-up unit of a company’s value whereby each share is a certain percentage of the whole business. “Shareholders” or “members” are those individuals who own limited company shares.

The number of shares that a company member holds reflects the “amount” a company is owned or controlled by that company member. It is typical for shareholders to receive a percentage of the trading profits in relation to the shares they own.

Issuing Limited Company Shares

A company may issue a minimum of one (1) share. This is common when a limited company is set up by an individual and he/she is the sole owner and company director. There is no maximum number to issuing limited company shares and therefore, as a company owner, you can issue as many shares as you wish during the process of company incorporation.

Here are some clear, demonstrable examples of popular share structures:

• One issued share = 100% company ownership.
• Two of equal value = 50% ownership per share.
• 10 of equal value = 10% ownership per share.
• 100 of equal value = 1% ownership per share.

If a business is worth £100 million, and there are 50 million shares, then each share is worth £2 (typically listed as 200p). The value of such shares may fluctuate for various reasons.

Limited company shares may be issued by companies in order to raise finances. Investors will consider purchasing limited company shares in the belief that the company in which they have invested will become a profitable enterprise, thereby gaining their portion of the success.

What Is the Nominal Value of a Share?

A share’s nominal value represents the monetary figure that a member has paid (or agreed to pay) for their fraction of the company. The nominal value reflects how much a member is legally expected to pay towards the debts of a company or if/when the company endures a winding up order. Therefore, the limited liability of company owners is represented by the nominal value of limited company shares.

What Is the Market Value of a Share?

The market value of a share is quite simply the amount that a share is worth at the point it is sold. For example, if a limited company share is sold for £1, then the market value of this share is £1.

What Types of Shares Can Be Issued by a Company?

There are a number of different types or “classes” of limited company shares, including:

• Ordinary shares:

A standard type of share with no unique rights or restrictions.

• Preference shares

When dividends are paid out, preference shares carry a right to preferential treatment.

• Cumulative preference shares

Cumulative preference shares hold the right that unpaid dividends from one year may be carried forward to subsequent years.

• Non-voting shares

Non-voting shares carry no rights to vote at general meetings. Companies will normally issue such shares to employees so that some of their earnings can be paid as dividends.

• Redeemable shares

Redeemable shares can be bought back/redeemed at some point in the future, either on a pre-fixed date or in response to a particular event.

• Alphabet shares

Alphabet shares permit companies to assign their shareholders with shares in different classes, and these distinct share classes are identifiable by a specific letter (hence the term “Alphabet Shares”).

• Management shares

Management shares hold additional voting rights, such as 10 votes per share. Management shares are generally held by subscribers, thereby permitting them to retain more power and control than other members.

Ordinary shares often suffice for small companies as they are the most popular shares class, hence you needn’t be too concerned about all of the above types of limited company shares.

Who Can Become a Shareholder?

Any of the following may become shareholders:

• Individual member
• A number of individuals/groups
• Partnerships
• Another company/organisation/corporate body

Although shareholders have the final say and authority concerning integral business decisions, they are not allowed to be involved in the day-to-day management and running of money matters as this falls within the role of the company director.

Notably, limited company shareholders may appoint themselves as company directors. This means that they can create a limited company as they desire and take on the roles of both shareholder and director. This is a fairly normal practice in small companies.

Stock Exchange Implications

Prospective shareholders may only purchase shares in your company if your company is listed on a stock exchange. This occurs when an Initial Public Offering has been completed (for example, on the London Stock Exchange). In this process, you transform from being a private company to a public company, thereby permitting members of the public to ultimately buy shares when needed.

Remember...

There are very specific implications of limited company shares of which new company owners must be aware. However, it’s worth noting that companies limited by guarantee have guarantors and a “guaranteed amount”, instead of shareholders and shares.

To find out more about limited company shares, or for more information about obtaining a registered office address, contact Your Virtual Office London, today.

There can be a lot of reasons why a company doesn’t want mail arriving at the business address. This could be because it is a home address and not an actual business premises, or that there is no-one available at the address to handle important business post on a daily basis. For these and many other reasons, Capital Office offers a comprehensive mail handling service with options to suit all types of business needs.

Business address and mail handling

One of the easiest ways to make use of our mail handling service is to use our professional Central London address as your business address. This means that all mail send to your business arrives at our office for our experienced staff to handle on your behalf. Not only that but your business benefits from having a prestigious London address as its business address – and legally, the business address you use for your correspondence doesn’t need to be your actual place of business.This kind of service is invaluable if you don’t have a business premises and don’t want to register your home address on public records. It prevents people knowing where you live and turning up at your door and also stops your home address being inundated with mail that you don’t have time to go through.A mail handling service such as ours is also useful for rapidly expanding businesses who may plan to move to larger premises on a regular basis to accommodate a larger stock inventory or expanding office space. There is little risk of important mail and parcels becoming lost in the post or arriving at a previous address.Even companies that already have business premises can use our address and mail services. Unless you have a secretary or admin assistant permanently sited on your premises, you will not have anyone who can expertly deal with the mail on a daily basis. Your business premises may be a warehouse, production facility or storage depot where no-one is around often enough to check the mail and sort out what is urgent or important from what is not.Businesses that operate in the UK but are based in another country can also use this service. They are required to have an address in the UK for statutory mail and also it helps when UK based clients can contact them through a UK address. It also helps potential new clients to build trust in your company when you have a London based address instead of an international one.

How our mail handling service works

The system of mail handling is simple and customers can choose from a number of different options about how their mail is handled, depending on their requirements. We use the latest mail sorting technology to ensure everyone receives their own mail and that it is dealt with in a timely manner.One option for mail handling that we offer is ideal if you too are based in London, or regularly visit the capital on business. You can call in at our offices in person and collect your mail at regular intervals to suit your schedule, or if you are waiting for something specific and know when it will arrive.Mail forwarding means that once we receive your business mail, we can then securely bundle it together and forward this on to you at an address of your choosing. We can send mail anywhere in the world and offer cheaper forwarding mail rates than Royal Mail to save you money.By far the quickest way to get your mail is to have it scanned and emailed to you. If you prefer to keep your paperwork to a minimum, or like the idea of getting your mail instantly via email because of tight deadlines, then this is a perfect service for you. We offer a same day service where we can scan the content of your letters into our secure system and then send the information to you via email.

Benefits of the system

So why would you choose to use the mail forwarding system rather than simply sort through your own mail or use some kind of P.O Box or deposit box system?

Using our service you get:

• Experienced staff using the latest in mail sorting technology
• The ability to have signed for post accepted
• The option to collect your mail from our London office
• A same day scan and email service with little time delay between receiving and reading post
• Post forwarded the same day if you choose this option
• A London address to use on all correspondence
• The ability to keep your own address off the public record
• No need to hire a secretary or admin assistant just to deal with post

The service takes only a few minutes to set up and there are three different packages available. You can take our services for three, six or twelve month intervals and the top package also entitles you to use of our meeting room for 2 hours.There are no hidden costs involved in the service and no set up feed – the price shown on the website is what you pay.Virtual office services are the best way to give your customers the service they require without the need for a costly business premises. And we can even meet your customers at our door for visiting clients to complete the professional image.

VAT is a tax levied by the government on all sales of goods and services and stands for Value Added Tax. Any business that earns more than the set threshold, currently £82,000 per annum, must register for VAT and complete a return each quarter.

Understanding VAT

VAT forms something of a circle once you register for it. Your business must charge VAT at the stated rate of 20% (or whatever it is at the time) on any goods and services that you sell to customers and to other businesses. Your business will also pay VAT on all goods and services you buy from another business. Finally, your business must submit a quarterly VAT return to HMRC.The idea is that with the VAT you charge on your goods or services as well as the VAT you pay, the two balance each other out quite evenly. If there is any different between the two, this is either paid to HMRC by you or paid to you from HMRC.Businesses with an annual income of less than the currently stated threshold figure can still register for VAT but it may not be beneficial, depending on the nature of their business.

What is VAT charged on

VAT is charged on a wide range of goods and services though there are some seemingly quite odd rules about what is exempt. Generally, it is charged on things such as:

• Sales of goods and services
• Hiring goods to someone or loaning if a payment is involved
• Selling assets from the business
• Commission payments
• Staff sales such as canteen meals
• Any business goods used for personal purposes
• Bartering, part exchange, gifts, and any other type of ‘non-sales’

The standard rate of 20% is charged on these goods and services but there are two other rates used for certain things. A reduced rate is applied to things such as children’s car seats as well as domestic fuel or power payments. Mobility aids for older people are another example.The other rate for VAT is the zero rate and this means the item is due for VAT but that the government have set the payment amount to zero. It is still recorded in VAT returns. Examples include items such as books and newspapers, children’s clothes, goods exports to non-EU countries and goods supplied to a VAT registered EU business as long as they have a valid VAT number.

Showing VAT charges and payments

In order to complete your obligations regarding VAT, you must show the VAT payment made during any transaction in your business, even if the item is a Zero rate. VAT needs to be shown on the invoice while the transaction needs to show on the business’ VAT account. It is then recorded on the VAT return.If an item is returned, then a replacement invoice or a credit or debit note is then issued to counter the original VAT payment. This should show the reversed VAT information as well as the reason why it was issued.

Discounts and free gifts

There are different ways to deal with discounts and free gifts from a VAT perspective to ensure the payments are recorded correctly. For example:

• A discount = VAT should be charged on the discounted rate
• A free gift = VAT should be charged on the value of the gift
• Multi-buys = VAT should be charged on the combined price of the items, assuming they have the same VAT rate
• Vouchers = No VAT if they are given away free, if not then at the price charged
• Free samples = No VAT due if they are for marketing purposes and to test a product so a small quantity

Submitting a VAT return

The three months accounting period for VAT means that returns are submitted every quarter. The information that must be provided includes the total sales and purchases for the period, the amount of VAT the business owe, the amount it can reclaim (what it has paid out) and what refund you expect from HMRC. Even if there is nothing for you to pay or to claim back, a VAT return must be submitted.You should check your VAT Return and payment deadlines in your VAT online account and make sure your finance department or accountant are fully aware of these deadline dates.Your VAT account will tell you when your VAT Returns are due, and the date which the payment must clear HM Revenue and Customs’ account. The deadline for submitting your return online as well as paying HMRC anything owed are usually the same - 1 calendar month and 7 days after the end of an accounting period.The only exception to the above rules is if, for example, you use the VAT Annual Accounting Scheme.If the VAT returns is not filed by the deadline or the full payment is not made, then HMRC can make a penalty charge, usually a percentage of the outstanding amount. This percentage figure increases based around the annual turnover of the business.

If you and one or more people want to create a company but don’t want to go down the route of becoming a limited company, then the type of company you will want to form is called a partnership.There are various types of partnership that you can register for and this will depend on the exact details of the format used when forming your partnership. Here we look at what these partnership formation types are and how you can set one up to suit your needs.

The basic business partnership

The basic business partnership formation involves two or more people who want to create a company together. It is a simple business structure that connects the individuals but doesn’t give the company any legal identity in its own right in the way that a limited company does. Business partners in a basic partnership are classed as self-employed and are registered with HMRC as such.When the company is formed, it should be registered with HMRC. A company name will need to be chosen and one of the partners will need to be the ‘nominated partner’; this is the person who is responsible for submitting tax returns and for keeping the business records. Basic partnerships don’t need to register with Companies House nor do they have the requirements in terms of administrative and accounting that limited companies have.If anyone leaves the partnership, dies, or the partnership goes bankrupt, then the partnership is dissolved as it has no legal status in its own right. The major downside of a basic partnership is that the partners will be liable for debts run up in the company name and will have to pay these costs in the event that the partnership collapses. It is also recommended that a partnership agreement is put in place before the company is created, dealing with how the company will be run, how much each partner has invested, how they will work together and what happens if someone leaves the company. Any issues that may arise are covered under the Partnership Act 1890.

Partnership income and tax

When you register as a basic partnership, income from the business is reported alongside the individual’s income from other ventures. This means each partner needs to submit an annual self-assessment form to HMRC and keep accurate records of all business transactions and income.The partnership itself will also need to submit an annual self-assessment form along with one for each partner. Tax and national insurance will be due on any profits from the partnership.

Limited liability partnerships

A limited liability partnership, or LLP as it is otherwise known, is a type of partnership where some or all of the partners have a limited liability. This means that individual members can have lower liabilities for any debts accrued by the business. Forming an LLP does require more work and legal paperwork than a basic partnership and this is why Your Virtual Office offer a fully comprehensive company formation service for limited liability partnerships.With an LLP, the business itself is classed as a single entity and the company is liable for any debts run up during its operation. This means that the individual partners are protected and will not be personally held liable for paying back all the company debts as they would be within a standard partnership agreement. This type of partnership is highly recommended for profit making businesses.An LLP needs to have at least two members and their rights and responsibilities as partners are laid out in a document called a ‘Deed of Partnership’. The ‘designated member’ is the person chosen to be responsible for maintaining all necessary and statutory communication with Companies House as well as preparing and submitting the company accounts and being the main point of contact for all official business regarding the company.The LLP company formation service we offer for this type of business includes every step of the formations process and begins with providing the name of the company to start the process. After registration, we then take the name of the members and draw up a Partnership Agreement to protect everyone involved. We have blank agreements available to complete with relevant information.Administrative details such as name and address of members, details of the amount of capital each partner will bring to the business as well as their roles and responsibilities will all be included in the documents as well as the details of what would happen to the partnership if a member chooses to leaves the business, retires or passes away.Most of this process can be very easily carried out via our website where you can pay for the service and provide us with the necessary information required to officially form your partnership. We can then provide you with the relevant paperwork to confirm the company’s formation for your own records.We are here to help you every step of the way and are more than happy to advise and offer our expert guidance should you be unsure of any aspect of forming your LLP. Please do not hesitate to contact us if you need our help.

When you run a company, there are several forms that must be completed and submitted to Companies House alongside the basic information required to create the company. These forms have different codes and purposes. There are also different forms required to notify of changes and amendments to the information held on the company by Companies House. Here we give some details of the most commonly used forms by registered companies to keep their information up to date. There is also a link to a full list of approved forms at the end of the article.

IN01 - Register a private or public company

You ca use the IN01 form to incorporate, or register, a private or public company. The link includes the optional continuation pages if you need these too. You can complete the paper form to register or incorporate a company within the UK. The paper registration and filing costs £40.00 to complete. To complete the paper version, the forms need to be printed on white paper at full A4 size. Alternatively you can register your company online for a fee of £12 through WebFiling if it is a private company limited by shares with model articles.

Form to Give Notice of Subscribers with Share Capital

This is for a company with share capital. You can use this pro-forma for a memorandum of association to form a company with share capital. It is used to notify Companies House that each subscriber to the memorandum of association:

• wishes to form a company under the Companies Act 2006
• agrees to become a member of the company
• agrees to take at least one share in the company

Form to Give notice of Subscribers without Share Capital

This is for a company not having share capital. You can use this pro-forma for a memorandum of association to form a company without share capital. It is used to notify Companies House that each subscriber to the memorandum of association wishes to form a company under the Companies Act 2006, and agrees to become a member of the company.

AP01 – Appointment of director

Form AP01 is used to appoint an individual as director of a company, but not to appoint a corporate director, in which case form AP02 is used. Details of the company and of the individual is required including their service address.The service address does not have to be the person’s residential home address but can be the company’s registered address or an address used under a Director’s Service address, though this needs to be stated. You can use our Director's Address Service if you would prefer to keep your home address private. Their residential address is included in the records but this information is not included on the public register, so will not be accessible by the general public. The form can be posted to Companies House or completed online.

AP03 – Appointment of secretary

Form AP03 is used to appoint a secretary but not to appoint a corporate secretary, for which form AP04 is required. The form includes the company’s details as well as the individual’s information and the date of their appointment. Both parties need to sign the form and it can be submitted by post or completed online.

AD01 – change of registered office

If the registered office of a business that is already formed is changed for any reason, then the form AD01 is used to notify Companies House of this change. It cannot be used to change the registered office of a Limited Liability Partnership, so form LL AD01 should be used in this situation. Company details and the new address is required for the form and it can be posted to Companies House or completed online.

AA02 – Dormant company accounts

If you are forming a company to be dormant and therefore not making a profit or trading immediately, then you should complete form AA02. The form is for use by a company that is limited by shares and has never traded with the exception of the issuing of those shares. The form cannot be used by charities or those companies limited by guarantee or any who have no shares.

363a – Annual Return

The Annual Return form 363a is completed each year on behalf of the company. It includes information such as the registered office and principal business activities using the SIC codes acquired when forming the company. Other information required includes the type of company, details of the company secretary and directors as well as past and present shareholders.

Abbreviated accounts

You must submit details about your company finances which must be made public in accordance with the Companies Act 2006. You must file a set of abbreviated accounts to Companies House every year, including information on cash held in the company, assets, debtors and creditors.Your first set of abbreviated accounts are due nine months after your first company year end. You can find out how to upload your abbreviated accounts to Companies House via Webfiling through this demo.

DS01 – Striking off application by a company

If you need to strike off a company then form DS01 is used for this purpose but cannot be used for a Limited Liability Partnership, where form LL DS01 is used in its place. Company details are required along with the signatures of all directors. It can be posted to Companies House or completed online.Here is a list of postal forms that a limited company can file with Companies House. Here you will find all the necessary forms you need to register your limited company and also make changes to your limited company further down the line. For example, you may want to change your company name or change your registered office address should you move business premises, or update your PSC register. You will also find comprehensive forms for your company accounts, change of company's objectives, changes to your company officers etc. all of which must be filed with Companies House.

[et_pb_section fb_built="1" _builder_version="3.22" da_disable_devices="off|off|off" da_is_popup="off" da_exit_intent="off" da_has_close="on" da_alt_close="off" da_dark_close="off" da_not_modal="on" da_is_singular="off" da_with_loader="off" da_has_shadow="on"][et_pb_row _builder_version="3.25" background_size="initial" background_position="top_left" background_repeat="repeat"][et_pb_column type="4_4" _builder_version="3.25" custom_padding="|||" custom_padding__hover="|||"][et_pb_text _builder_version="3.27.4" background_size="initial" background_position="top_left" background_repeat="repeat"]When you form a limited company, two key roles need to be filled by at least one person in order for the company to be created – a shareholder and a director. Both roles in the company have their individual requirements and responsibilities but these are very different from one another.Here we look at the two different roles and what it means to be one or the other for a limited company:Being a Company DirectorThe role of company director might sound like an impressive title to hold and it certainly looks good on your C.V. but it isn’t a title without any duties. In fact, the company director has the most responsibilities within a limited company and for this reason, you must be at least 16 years old before taking up the role, as well as not having previously been disqualified from taking such a role.To become a director you must not be currently in bankruptcy, unless the court has given permission for you take the role and must not face any government restrictions. Lastly, you must not have been restrained by a court from becoming a company director.Company Director responsibilitiesAssuming you fulfil the above requirements, then you can become a company director without hesitation. If you take up the role, then you will have the following responsibilities:

• Ensuring that any information requested by Companies House is provided, such as annual accounts and tax returns
• Act within the rules laid out by the Articles of Association
• Answer to the shareholders of the company
• Promote the success of the business
• Act with diligence, care and skill in all of the business dealings
• Avoid or declare any conflict of interest
• Look after health and safety of employees of the company
• Organise any credit and enter credit agreements on behalf of the company

These duties are laid out under the Companies House Act of 2006 and if you fail to comply with legal and regulatory ones, such as submitting company accounts, then you can be prosecuted as it is a criminal offence not to comply with these rules.Director’s addressAnother aspect of becoming a director is that you must give an official address as part of the company formation paperwork. This address is then logged on a public register where anyone can see it, alongside your business address.Some directors prefer for their home address not to be a matter of public record, so for this reason they choose to use a director’s service address such as the one offered by Your Virtual Office. This allows you to use our prestigious central London address as the director’s address rather than your own personal home address and prevents people from finding out where you live.Using our London address can also add gravitas to your business, especially for new companies looking to establish a credible reputation in the business world. It can look very professional on your company stationary. The directors service address package includes forwarding of all your important statutory mail for the duration of your contract.Being a shareholderThe other main role required to establish a limited company is that of the shareholder and each company needs to have at least one shareholder when formed. Shareholder can also be known as members depending on the format of the company selected.A shareholder can be a person, a group of people, a partnership, another company or even another kind of organisation or corporate body. A shareholder can also become the director of the company – you don't have to be one or the other, you can hold both roles.On the whole, shareholders don’t usually get involved in the day to day running of the company or become involved with their financial affairs, but shareholders do carry some responsibilities. These include:

• Investing financially in the business (at least £1 to be a shareholder)
• Receive a portion of profits relating to their shares
• Contributing to any company debt in proportion to their shares
• Helping choose a director and deciding on director’s powers as well as their salary
• Authorising the transfer of shares
• Names of all the shareholders in a company are part of the public record along with a contact address, though the shareholder can appoint a nominee if they wish to keep their personal details off the public record.
• Shareholder agreement

Shareholders normally agree to a shareholder agreement which isn’t a legal requirement but is legally binding once signed. It defines the responsibilities and rights of the shareholders, alongside how the company is managed and decisions made. It can cover issues such as the appointment and removal of secretaries and directors, their salaries, restrictions and procedures relating to issuing and transferring shades and even changing the structure or nature of the business.The document is private and not entered into the public record. It can be created with a solicitor at the time of the company forming or at a later date. A copy should be retained on the business premises and by all shareholders if required.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]