How to start my company
Register your Company
One of the first things to do is to obviously register your company. A limited company is a separate legal person to yourself. It can sign contracts and enter in to agreements. If the company fails and has to close you are largely protected from any losses. This is called limited liability. Your liability for the company’s debts are limited to the value of the shares that you have bought in the company.
This makes a limited company a very good choice for you and your business because it gives you protection should things go wrong.
The limited company is also more tax efficient since you can pay yourself in a mixture of salary and dividends. You are also only liable to pay personal tax when you actually take the money from the company, if you are a sole trader you are taxed when you earn the money.
You can register the company directly at Companies House through the website. You need to choose a name that is unique, does not contain offensive or restricted words and has the word Ltd or Limited at the end.
You need at least one director and shareholder and to choose the registered office address for your company. The registered office does not need to be your home address, it can be your office or you can use a registered office service that will let you use their address and forward your letters on to you.
Open a bank account
Once the company is registered you need to open a bank account. The bank account needs to be in the company name and not be a personal bank account. The money that is paid into the account belongs to the company until you pay it to yourself. You need to keep your personal spending out of the company bank account and use your personal bank account for this.
You should choose a bank account that is easy for you to use and one that will allow you to connect he bank account to your accounts.
You need to do this so you can start to be paid money for any work that you do in the company and so that you can start the process to register for payroll and VAT. The application for VAT will ask you for the company bank details so that any vat refund can be repaid to the company in future.
Register for Payroll
You need to be able to pay yourself a wage from your company. You need to be able to pay your employee’s if you have them and to pay HMRC the tax and national insurance that you deduct from their wages.
To do all of this you need to register as an employer with HMRC. When you do this you will get a PAYE reference and an Accounts Office Reference. Both of these will be need to run, submit and pay the taxes from the payroll.
You will need to make submissions to HMRC when you pay yourself or your employee’s. These submissions are made under ‘real time information’ or RTI. This means that as soon as you pay your staff you have to submit the details to HMRC to tell them what you have paid the staff and the amount of tax and national insurance that is due to be paid.
These submissions are due weekly or monthly depending on when you pay your employees.
As an employer you have an obligation to give your employees a payslip. Their payslips should explain any deductions made from their wages. If you take tax, national insurance or any other deductions.
You will also have to set up a company pension scheme for your employees and make contributions in to the scheme and also deduct the employee’s contribution as well in to the pension scheme.
Register for VAT
You will need to register for VAT when your sales figure for any twelve month period goes over £85,000. You can of course choose to register before you get to that value of sales. It may be better to register for vat as soon as you have your limited company.
When you register for vat you can choose to either use the standard vat scheme or the flat rate vat scheme. The standard scheme lets you reclaim vat back on any expenses that you have where you pay vat. The flat rate vat means that the vat you pay is a percentage of gross sales that you have.
Choosing to register for the standard scheme will mean that you can reclaim vat back straight away on the expenses that you pay. This can include vat back on computer equipment or software, office rent or telephone bills.
You will have to submit vat returns every three months to HMRC and pay nay vat that is due. VAT returns now have to be submitted using MTD compatible software such as Xero or Quickbooks. You need to keep your company books up to date using software like Xero and you can keep digital copies of any receipts that you have.
Set up your software
Setting up your software is one of the most important things that you can do to help with the growth of your business. It can make sure that you get up to date information on how your business is doing and will help you make better decisions.
You need to be able to submit your vat returns using the HMRC MTD service so you need to have software for your business that can do that.
When the software is up to date and you use it for billing your customers for your work, being able to see what invoices are overdue and what you need to chase up to get paid is it a lot easier. You can see which clients are late payers and then take action to make sure that you get your bills paid on time and that you get the money in to your bank account.
You can see what taxes you have to pay and can make sure that you put the money aside to save for these and you can pay them when they are due.
Having up to date information means that you can plan better for your business and look to the future knowing that you can pay your bills and taxes.
Next Steps
If you are looking to start your company or perhaps have already started one. Please contact us if you need help making sure that you get it right and start out on the right footing and get your company ready for success from the start.