Setting up a Limited Company
When you commence work in an interim capacity, the most tax-efficient way to do this is to set up a limited company.
As a Limited Company, you can be registered for VAT on the Flat Rate Scheme and there are a number of expenses that can be legitimately claimed through the business. If you have an accountant, they will normally be able to advise you on how to go about this process, however there may be a charge for this. In fact you may find it is quite simple to do this for yourself.
To form your company, there are certain items of information required by Companies House.
(1) The proposed company name. You should check the Companies House website (www.companieshouse.gov.uk) to make sure that the name is not already being used. It should normally end in either ‘Limited’ or ‘Ltd’.
(2) The names and personal details of all your shareholders. Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights. A company limited by shares must have at least one shareholder, who can be a director. If you’re the only shareholder, you’ll own 100% of the company. There’s no maximum number of shareholders.
(3) The number of shares to be issued to each shareholder. For companies of this size it is convenient to issue a total 100 shares each of £1. Ownership of shares not only indicates ownership of the company but the share capital also provides initial working capital for the company. The money should be paid by the shareholders into the company bank account.
(4) The names and personal details of all your directors. Your company must have at least one director. Directors are legally responsible for running the company and making sure company accounts and reports are properly prepared.
(5) The address of your registered office. Your registered office address is where official communications will be sent, for example letters from Companies House. The address must be a physical address in the UK and in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland.
(6) If you’ve appointed a Company Secretary, you will need to provide the name and contact details.
(7) When you register your company you need a ‘memorandum of association’ - a legal statement signed by all initial shareholders agreeing to form the company. Please click the link for a template Memorandum of Association and ‘articles of association’ - written rules about running the company agreed by the shareholders, directors and the company secretary. Please click the link for a template articles of association Models of Association for Private Companies
Once you have these details, you can register your company. You can register online if your company is limited by shares and uses standard articles of association. It costs £12 and can be paid by debit or credit card or Paypal account. Your company is usually registered within 24 hours. Here is the link to register your company at Companies House http://resources.companieshouse.gov.uk/promo/webincs/
After you’ve registered your company with Companies House, you’ll need to register it for Corporation Tax. You’ll need to do this within 3 months of starting work as an interim.
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