Setting Up A Limited Company

If you are planning a new limited company you can save time, trouble and money by understanding the basic issues before you start. There are five key roles in a company, though in small companies, one person may perform more than one of these roles.
A company is owned by shareholders who share in the profit of the business by taking dividends in proportion to their shareholding. A new company with only one owner usually has only one share with a nominal value of £1so the shareholder is only liable for a maximum of £1 should the company fail. New shares can be issued to new shareholders and different classes of shares can be created.
The directors run the company in the interests of the shareholders. They may also be shareholders themselves and a company must have at least one director. Most company directors will be required to complete a Self Assessment Tax Return. You will need to declare whether a director has any other directorships when applying to form the company.
Staff may be employed to work in the company. To start with that is often one of the directors but eventually you may employ others. Once a company employs staff it will need to set up a payroll scheme. There is scope for tax planning when a shareholder is also an employee when there is a potential tax saving by taking dividends rather than salary.
You can choose whether to have a Company Secretary and for a small company they do not need any particular qualifications. If you set up the company without a Company Secretary, then one of the directors will be responsible for the administration of the company and they will need to be organised as they are responsible for ensuring that the statutory company paperwork – accounts, corporation tax return and annual return are completed and filed on time.
You will need to keep accounting records carefully from the start of the business for two reasons; both to enable you to monitor the progress of the business as well as allow you to prepare the annual accounts. Many businesses wait until the year and to organise their records but our experience is that this is usually mistake. It would be much better to seek advice on how to keep your records at the start of the business so that you start as you need to go on.