With setting up a business it is essential to have a good working knowledge of business law and strict attention to detail, so seeking professional assistance is vital. JMR Solicitors have the experience and knowledge to guide you through the process and alleviate the stress from the process.
What are the benefits of incorporating a business?
Incorporating your business may give you some protection should your business fail. As a sole trader, you would be personally liable for the debts should your business fail, potentially putting yourself in danger of bankruptcy if the debts owed are considerable enough and you are unable to make repayments. Being a limited company offers some protection against this, as legally a limited company is a separate entity and therefore its finances are separate from the finances of its owners.
As a director of a limited company, your risk of loss is restricted to the money that you have invested in the company itself, providing you don’t trade fraudulently or recklessly. However, please note that you will still be liable for bank loans if you have provided personal guarantees for the limited company.
Being a private limited company may also make you more credible to potential clients, customers, investors or partners.
What you need for setting up a limited company:
There are some ready-made limited company names available to purchase, however, if you wish to form a new limited company you must submit a memorandum of association, articles of association and a IN01 form to Companies House.
JMR Solicitors can help you to complete these applications and draft your memorandum of association and articles of association on your behalf, as these cannot be supplied by Companies House.
What are the responsibilities of a company director?
A private limited company must have at least one appointed director. The director must be over the age of 16 and must not have been disqualified from acting as a limited company director or be an un-discharged bankrupt.
Directors are responsible for notifying Companies House of any changes in the management or structure of the company. All accounts must be filed with Companies House each year, ahead of the requested date, or a fine will be payable. Accounts must also be audited annually unless the company is exempt from this. HM Revenue and Customs must be informed of any taxable incomes or profits by way of an annual return, after which, corporation tax will be payable.
Directors are employees of the company so, therefore, must pay class 1 national insurance contributions and income tax.