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Ltd Company Accounts

As a limited company, you will look like a more secure prospect to investors.

First off, what is a limited company? A limited company is a distinct legal entity that can enter into contracts in its own name. any income received or expenses incurred are the responsibility of the company, not the directors and shareholders.

You should decide whether being a limited company is viable for you or whether you should be a sole trader. The following is a comparison of the two.

Sole Trader

Limited Company

No distinction to whether assets and liabilities are company owned so can be deemed responsible by the individual- personal assets can be seize if anything goes wrong

Company liabilities are the responsibility of the company not the director

Cheaper and easier set up with less professional fees

Can be very Tax Efficient

Fewer reporting requirements

Can give a professional image

We understand as a business that choosing the right entity is not an easier thing to do. As such, we are happy to discuss your requirements and help you choose the best way forward for your business.

If you decide that a limited company is the best business entity for you then the next step is tax. Every limited company based in the UK is subject to corporation tax on their profits.

All limited companies must be registered with HM Revenue and Customs (HMRC) so that they know you are liable for corporation tax.

You must calculate how much profit your company makes for each accounting period and how much corporation tax is payable as a result of those profits. Current rates for corporation tax stand at 19%.

What is an accounting period? An accounting period is the year that you trade as a business. This partners with the year end. Year ends can be decided by the company itself or it can run alongside the tax year (5th April). Opting for a year end that links to the tax year can also avoid any complex overlap relief calculations.

Once you have chosen your year end, it is important to note that Companies typically have nine months from the year end to complete their accounts and Companies House will have a record of this on their website.  There are strict penalties for late filing and interest is charged on late tax paid, so it is important that the deadlines are adhered to. However, nine months gives plenty of time for the company to prepare the accounts so that no errors occur. This is where we step in for the majority.

At AA+T, we opt for a digital operation. This means that we can be sent through bank statements where we can take income and expenses for the Limited company. If a digital service is not for you, we also have an office based in Essex where we can have meetings to discuss any queries. If you have a turnover of £500,000.00 or less in the year and you need help with corporation tax, we are happy to help.

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In summary, here are some Pros and Cons of incorporating your business:

Pros

Cons

Limited Liability- As explained above, the company is a separate legal entity, so your personal assets are safe.

Security- Limited companies look more secure to potential investors.

Credibility- having a Limited company looks more established and professional.

Tax Efficiency- Having a Limited company can be more tax efficient.

Transferring Ownership- Having a Limited company means that transferring ownership of it is more effective and can be done more readily.

Higher Costs- professional costs for setting up a limited company are much higher than if you were self-employed. There are also additional costs with Companies House filing requirements.

Privacy- Companies must file their accounts and other documents on a public record with Companies House.

Director’s Responsibilities- A company director may be at risk of criminal or civil penalty for late filing.

Whether you choose to be a Limited Company, Sole Trader or Partnership, letting us prepare your year-end accounts will relieve you of what can be an extremely stressful and time-consuming exercise.

We can offer interest free direct debit instalments to suit your requirements.

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For more information on our LTD company accounts service or to find out about our other accountancy services, contact our accountants in Brentwood today.