Now more than ever, it is easily achievable to incorporate your company. Thanks in part to the internet and online company formations, setting up your limited company no longer has to be a bureaucratic maze. However, incorporating your company is only the start of your exciting business venture, and there are some very important actions to take next. In this article, we will walk you through some of the key considerations and principles that you need to be aware off once your company goes official.
Upon formation, make sure that you are in possession of the following key document; some of these will underpin many important legal matters for your company, and are well worth revising.
- Your Certificate of Incorporation — this will be issued to you following your company’s formation.
- Your company’s Memorandum of Association — this details the subscribers (the company’s first members when it was registered).
- Your Articles of Association — in brief, this sets out the internal regulations of your company.
- Share Certificates — these need to be allocated to your company’s shareholders, essentially acting as evidence of their shares.
Once your company has started trading, you need to register with HMRC for corporation tax within a three-month window. ‘Trading’ in this context not only means that your company is buying or selling goods or services, but also includes advertising, renting property, and employing staff.
Additionally, you are required to register for VAT once your company turnover exceeds the £85,000 threshold, or that you can foresee it will in the next 30-day period.
One thing you won’t have to apply to the HMRC for is your company’s 10-digit code, known as a Unique Tax Reference (UTR). After incorporating your company, HMRC is then notified by Companies House and withing 14 days it will send you a letter to your registered address that contains UTR. The purpose of this code is to help identify your company for the Corporation Tax explained above. Make sure that you keep this code secure.
Setting up a company account
Without a doubt, having a handle on your company’s accounts is a crucial first step to take as a limited company. Unlike businesses for which you operate as a sole trader, your company is a separate legal entity to you as an individual — whether you be an owner or manager. This has various legal implications, but chief among them is that all turnover and debt belong to the company, not you as the individual. Therefore, it is wise to open a separate bank account in your company’s name. This way, your personal finances won’t become confused with that of your business transactions and expenses, saving you many difficulties in the future.
Be aware of your company’s annual requirements
Once your registered company has become incorporated and gained ‘legal personality’, you should be savvy of the various documents that must be sent to the governing bodies.
One of the most important documents to return is the ‘confirmation statement’, which is essentially a brief overview of your company (name, registered address, registration number, etc.). This document must be sent within 14 days of your company’s incorporation, and then must be sent to Companies House at least once every 12 months. It is crucial to supply the relevant information to Companies House to avoid being regarded as no longer in business, and subsequently removed from the company register.
In addition to your confirmation statement, every year you will be required to report on your company’s activities for your financial year. Copies of these annual accounts (also known as ‘statutory accounts’) must always be sent to the following:
- All Shareholders
- Anyone who can attend the company’s general meetings
- Companies House
- HMRC (as part of your Company Tax Return)
The initial deadline for your annual accounts is 21 months after the date you registered with Companies House. In the case of smaller companies, it may also be possible to send simplified versions of these accounts. Be sure to consult the HMRC website if you believe this applies to your own business.
Although this may all sound daunting, HMRC will give you plenty of notice for filing deadlines, and you can thankfully keep track of these on their official website.
Hold your first meeting
Under the Company Act 2006, private companies are not legally required to hold annual meetings — this doesn’t mean you shouldn’t though. The importance of holding meetings has long been established in company culture and these are often vital for efficient organisation.
A general meeting is a formalised process that includes the shareholders of a limited company. These meetings are a great opportunity for members to discuss company affairs, including:
- Company finances
- Affirming the company directors or changing their powers
- Restructuring the company
- Changing the company’s name
- Modifying the shareholder’s agreement
- Matters relating to company shares
For a general meeting, you are required to give two weeks’ notice to all shareholders, along with key details concerning the meeting itself.
It is also advisable to hold your first board meeting shortly after your company’s formation. This will help you discuss the key legal and administrative principles of running a company, as well as any other formalities that need addressing. For example, it is a prime opportunity to look over your Memorandum and Articles of Association.
Even if you are the sole director, a ‘meeting’ such as this is a good chance to assess your next steps. Remember, minutes for board meetings still need to be taken, if even if there is only one director in your company.
Reflect on your company name
A company’s name is an integral part of your businesses’ DNA, and will play a huge role in the way it is perceived. As your company name is legally required to be made visible on official documents, your website and the exterior of any building that is a place of business, it is vital consideration. Although frequently changing your company name might not be the wisest choice, your new status as a limited company may pose the perfect time for a revamping of your business image.
Following your company’s formation, it is possible for you to change your registered company name at any time. This may be done through a special resolution involving your shareholders, although your articles of association may already grant you permission. If authorised through a special resolution, you can register online using the Companies House online service for a fee of £8 or £30, depending on the service you choose. Alternatively, you can apply by post — this includes the special resolution approach — or via permission through your articles of association.
Kick off your marketing campaign
Once the legal and administrative dust has settled, it’s time to start getting your company’s name out in the market. As a fully registered company, your business will likely have more credibility in the eyes of customers and suppliers, offering your business opportunities that may have alluded you previously. Whilst the daily routine and overall structure of your business may not have changed drastically after incorporation, registered companies often occupy a more prestigious standing. This may be seen as a byproduct of the various statutory obligations that a company must adhere to, as well as the increased transparency of your business.
Now that you are a limited company, it is the perfect time to start forging a distinct brand identity that can be trusted. If you haven’t already done so, consider developing (or improving) your business’s website, as well as its various social media outlets. In particular, you should have a website domain name that includes your Company name — this will increase your visibility and trustworthiness.
If you are tied-up with the running of your business — or the initial administration — it is worth considering specialised agencies to help develop your company’s image. This may very well be something that you can do yourself, but a professional’s touch can really springboard your business and capitalize on your newly incorporated status.
Think about hiring an accountant
There is no legal requirement to appoint an accountant for your limited company, but the extra breathing room and peace of mind you will gain is its own incentive. As well as improving the efficiency and cashflow of your business, you will spend less time on administrative tasks, and more time directing your business and achieving your vision. Although the idea of paying accountancy fees might not be too appealing at first glance, it could be an investment that will help you save money going forward.
It may be the case that your business needs to grow first to make an accountant viable, but you should always be ready to expand and chase new venture were possible. Remember, you’re a limited company now.
If you decide to run your business as a limited company, Uniwide Formations can act on your behalf to make the process as smooth as possible. We know each business is different, so we offer a range of company formation packages to incorporate your company or register a partnership. To find out more about our services and how we can help your business contact us today.