A Limited Company is defined as being a private company whose owners are liable for its debts only to the extent of the amount of capital they invested. A Limited Company or a Personal Service Company helps you, as a contractor, by acting as a legal structure via which all of your business accountancy and taxation matters can be handled. You will be in charge of the administration of the company but will require the assistance of a third-party accountant.ATA does a case-by-case study and a consultant will work with you to tailor the most effective solution for your personal circumstances.All relevant information will be registered with and held by the Companies House.
Once the Limited Company is formed, you will be appointed director of the company and will have a series of legal and financial obligations. If the idea of dealing with another round of obligations seems daunting, don’t worry because Access Tax and Accounting will stand by you, ready to provide the assistance you need, anytime and anywhere.
It is your responsibility to let us know if you have been subject to bankruptcy in the past which will disqualify you to hold the directorship of a Limited Company.
As the director of your limited company, you will need to fulfil certain obligations, such as:
- Maintaining proper accounting records, based on which accounts can be prepared. These accounts must provide a true and fair reflection of the company’s financial position;
- Creating accurate accounts and filing them with Companies House by the due date;
- Filing corporate tax returns with HM Revenue & Customs and ensuring taxes are paid on time;
- Proper handling of payrolls;
- Ensuring taxes and national insurance are deducted from payrolls as necessary and are paid to HMRC on schedule;
- Making sure the company trades solvently so all financial liabilities can be met. Failing to do so is an offence.
You also have a series of legal responsibilities as the director of a limited company, such as:
- Filling out and filing the Annual Return, also known as Form AR01.
- Notifying Companies House of any changes in the company director’s and/or secretary’s details by filing the appropriate forms.
- Informing Companies House if the registered address of your company changes.
- Acting in the best interest of the shareholders of the company, which means a director may not obtain any gains in a way that would hurt the company.
These responsibilities might seem intimidating but with ATA as your partner, you’ll never have to worry. Our team of accounting and tax specialists will help you fulfil all these obligations and more.
ATA’s Team of Specialists Provides You with the Support and Advice
You Need to Effectively Fulfil Your Legal and Financial Obligations as Director of Your Company
More on the Responsibilities of Owning and Operating a Limited Company
When you run your own limited company, it’s your responsibility as the Director of the company to correctly administer all tax issues, employment rights and contractual obligations. At the end of your company’s financial year, which is usually 12 months after the company was incorporated, your accountant will compile the company’s accounts. You will then be responsible for the corporation tax on all the company’s profits for the previous year, which must be paid within 9 months of the end of your company’s financial year. Profits are calculated by deducting expenses, pensions, salaries and other costs from total revenues.
When appointing a director for your company, certain restrictions apply. For example, if you’ve ever declared bankruptcy, or were discharged from a previous directorial position, there is a probability you might not be eligible to hold the position of director in another company.
Getting Paid and Your Personal Responsibilities
As a contractor operating through a limited company, we will need to determine whether you are disguising employment via a limited company, so HMRC can make certain they aren’t losing any tax or national insurance income from people who are actually employees but are using a different legal structure to save money. In such a scenario, your remuneration will be made up of a small monthly salary and dividends. And you don’t have to worry about calculating taxes such as PAYE (Income Tax) or Employers and Employees National Insurance dues because Access Tax and Accounting can handle it for you so you can focus on more important tasks, like making money!
We’ll also help you with expense claims. Legislation dictates you can claim back any expense you might incur on behalf of the business, such as computer equipment, stamps, office rent and so on. This can be done at regular intervals. If you fall under IR35, you are permitted to claim an expense allowance of 5 percent of your total turnover. As you can imagine, you’ll also have to pay taxes personally, and ATA can help you here as well. With our help, you’ll be able to meet all your personal tax liabilities on time and you can also be certain you won’t be overpaying your taxes.
The tax system requires you to pay taxes based on a self-assessment process, which we cover in another section. The taxes must include any form of personal income you receive as well as benefits in kind, which refers to anything you receive as compensation for your services, even if it isn’t money. Taxes must be paid by the 31st of January every year for the year that ended the previous April.
One thing we can’t stress enough is that if you are working via a limited company and are taking payment via a dividend structure, you must not be caught by the IR35. If you are caught and deemed employed, tax liabilities will accrue and could lead to you owing a significant amount in back taxes including the NICs which should have been paid on the employment income. You needn’t worry because ATA can provide you with expert IR35 advice. If we find you are at risk of failing the test, we can work with you to devise a plan to solve your problem as easily and quickly as possible.