Forming a Company can take a lot of effort, and if not done properly can end up being quite costly…
By Diane Pilling · 24 Oct 2012
There are a few types of businesses that can be set up. First up is the sole proprietorship where the companies finances and your own are combined. In simple terms, if the business goes into debt to the sum of £100,000, then you yourself are in debt to the sum of £100,000 and if you don’t have the full sum then your assets such as your house can and will be seized. The dangers of this are clear and the benefits can be a little harder to identify. Usually these sorts of companies are one man stalls at a market or something similar where the profits, turnover, debts, and subsequently risks are significantly lower. The other type of business that one could choose, and is by far the more popular of the two is called a private limited company . In most cases these companies can be identified by the abbreviation (Ltd) at the end of their name (e.g. Affordable Accounts Group Ltd). In this case the company takes an entity of it’s own whereby any debts are the companies and the companies only. The benefits are clear however there are more regulations on private limited companies than on sole proprietorships.
Share capital is the first requirement of a Private company. They can range from any value in any currency and in any amount for example 10,000 shares of 1p can be issued or 1000 shares of £1 can be issued to the same effect. In most cases this would be a private company and shares could be traded in only private agreements between the buyer and the seller. Companies can then choose to float the business and then the shares will be available on a stock exchange. Few companies will decide to form as a completely public entity .
Company accounts must be started on the day of formation and end on the accounting reference date. As with most aspects of accounting, a late fee can and will be issued. Finally, each company must have a registered office. It does not have to be the premises where business occurs and in some cases can be the lawyers office or accountants offices. This is so all official documents can be sent to this address from the government
As you can see this whole process can be a bit daunting there is guidance and although it can all be done for £20 dealing directly HMRC and can be done entirely electronically, It is almost always a false economy as the late fees and penalties can all too easily occur. Getting an accountant to form your company can set you up with people you trust and more importantly people who know your company from the start and will be a lot more help than an accountant who is starting halfway through. As ever, we can help with this. Please contact us on 01942 356681 for a meeting either at our offices or at yours.