Setting Up a Limited Company: What Happens Next?
Receiving a Certificate of Incorporation is only the beginning of running a limited company. The company is a separate legal entity, so its money, contracts, records and tax responsibilities must be kept separate from those of its directors and shareholders.
Open a Company Bank Account
Use a dedicated account for company income and spending. Paying personal costs from the company or receiving business income personally creates additional bookkeeping and tax complications.
Money taken by a director must be identified correctly as salary, a dividend, an expense reimbursement, repayment of money introduced or a director’s loan.
Register for the Relevant Taxes
Tell HMRC when the company starts trading and register for Corporation Tax. The company may also need to register for:
- PAYE when paying directors or employees
- VAT when taxable turnover exceeds the threshold, or voluntarily
- CIS where it operates as a contractor or subcontractor
Do not assume Companies House registration automatically completes every HMRC registration.
Establish Bookkeeping
Choose accounting software and record transactions from the first day. Keep sales invoices, purchase invoices, receipts, bank statements and finance agreements.
Regular bookkeeping makes VAT, payroll, accounts and tax returns more reliable. It also helps directors check profit before declaring dividends.
Understand the Annual Responsibilities
A company will normally need to:
- Prepare and file annual accounts
- Submit a Company Tax Return
- Pay Corporation Tax
- File a confirmation statement
- Maintain statutory records
- Operate payroll and VAT where registered
For most private companies, accounts are due nine months after the financial year end. Corporation Tax is normally payable nine months and one day after the accounting period, while the tax return is due after 12 months. First accounts can have different deadlines.
The company should also maintain information about directors, shareholders and people with significant control. Changes may need to be reported to Companies House before the next confirmation statement rather than simply being noted internally.
Plan How to Pay Yourself
Salary, dividends, pensions and benefits have different tax consequences. Dividends require sufficient distributable profit and appropriate paperwork. Read our guide to paying yourself from a limited company.
GMS Accountants helps new companies in Cambridge and Nottingham with formation, registrations and ongoing accounts. Contact us to start with the right systems.
