Small business owners take on a number of accounting responsibilities when forming a limited company. A good accountant should keep you informed of what needs to be done, when and how. In fact, they’ll do most of the work for you (as the Crunch accountants do).
Nonetheless, it’s good to be aware of all the processes and deadlines, especially if the accountant has yet to earn your trust!
Incorporation date – also referred to as Accounting Reference Date (ARD)
This is the date at which your limited company has been formed. Completion of the incorporation process requires three documents to be sent to Companies House:
1) Form IN01 Application – includes company name, location of registered office, signature of company director(s) (the person setting up the business) and company secretary if applicable, and share capital details and particulars regarding each class of shares.
2) Memorandum of Association – includes the names and signatures of the people running the company.
3) Articles of Association – outlines the directors powers, shareholders rights etc – it’s all about setting the rules for the running of the company’s internal affairs.
Company Tax Return
The company tax return – which includes the corporation tax return – must be done on an annual basis using the incorporation date as point of reference.
The Company Tax Return includes:
* Your company tax return form (CT600 online or paper version) which includes your self-assessment of corporation tax, in other words, how much you’ve calculated that the taxman needs to take away.
* Your company’s accounts, tax calculations any other relevant information or supporting documents.
Annual Return – Form AR01
Failure to get your Annual Return in on time is a criminal offence – so don’t leave anything to chance and make sure you get it done in plenty of time! Once again the 12 month period is worked out by the date of your company incorporation.
So, what is involved?
It’s really an overview of your business data, including details of key personnel, share capital, shareholdings and the registered office. It includes the following:
* Name of company
* Details of the company director(s)
* Details of company secretary(s) (if applicable)
* Company registration number
* Type of company (whether it’s private or public)
* The registered company address
* Main business activities (what do you actually do?)
* The ‘made up’ date (the date at which all the information in an annual return must be correct)
* Details of the issued share capital
* Shareholder details
National Insurance will need to be paid only if you earn a salary of over £5,715. The advantage of running a limited company with a service like Crunch is that we can ensure you can pay yourself in the most tax efficient way possible – via a combination of dividends and salary – so that you don’t go over the NI threshold.
If you do end up above this threshold then NI will usually have to be paid on a monthly basis – assuming you do your payroll monthly.
When you’re the director of a limited company you will need to pay yourself a salary via a PAYE scheme as you are also an employee. PAYE is usually sent off to HMRC quarterly, so long as your company’s total PAYE/NIC contributions are £1,500 a month or less, which it usually will be.
At the end of every quarter, or in some cases annually, a VAT registered contractor or freelancer must add up all the VAT they’ve charged and then deduct the VAT they’ve been charged themselves during their business transactions. Most freelancers and contractors will be on the flat rate of 17.5%, which is set to rise to 20% in the new year.
You must register for VAT if your annual turnover is in excess of £70,000 per annum.
Self Assessment tax return
As a director of a limited company you need to complete a self-assessment return and will have to register with HMRC to do so. HMRC usually sends out a Self Assessment tax return in April each year but if you file online they send a letter called ‘Notice to File’ instead.
Self-Assessment can be filed on paper or online – the deadline for the paper return is 31 October and must be with HMRC by midnight on this date. The deadline for filing online is 31 January.
The following information is included in the Self Assessment for the relevant tax year (6 April through to 5 April the following year):
* UK savings and investments
* UK pensions, annuities and benefits
* Life insurance gains and AVC refunds
* Any other taxable income
And on supplementary pages you’ll need to detail:
* Pension contributions you make
* Pension payments you receive
* Income from letting property or land
* Any capital gains or losses
When running a limited company you should always seek qualified accountancy advice. Crunch accountants are accredited by the PCG due to their expertise in tackling some of the trickiest legislation affecting the freelancing community.