The Company Service

It is now possible for anybody to set up their own company on the Internet. This can lead to all sorts of problems, and this website aims to set up a Company Service to assist new directors not to do things which are inappropriate or which merely enrich HM Revenue & Customs.

The first question is whether you need to set up as a company at all? Traditionally many business set up as sole traders or husband-and-wife partnerships. The usual trigger for incorporation is when big income tax bills start arriving because the profits are large enough to incur tax at the higher rate of 40%, which used to be called surtax. Of course the sole trader or the partnership does not have limited liability, but that may not be an issue if their customers are unlikely to sue them. There are several good and legitimate reasons for setting up as a company from the start, but you should be aware that many businesses start off as sole traders and do not run into lots of bureaucracy straight away.

If the company has been set up already, you can always keep it dormant until you need it, which will cost you £13 a year in Annual Returns. Perhaps the company has the same name as a website address, so you want to keep it. You can then trade as the company name minus the “limited” for a while until you are ready for the company.

If the company is making money, then everything should normally pass through a company bank account. Any cash takings should be recorded straight away, and many companies have a policy to bank all takings at once, and then to draw out cash as they need it, for example to buy stationery or to pay wages.

What you cannot do is to help yourself to the company’s cash without any paperwork. If you do this, then it will just turn out to be expensive later on when the Revenue catch up with you. To take cash out, you can pay yourself a basic salary and then take dividends. Any accountant will help you with this, but if you don’t do it, then you will just be making a gift to the Revenue.

As an example, you can pay yourself a basic salary of £676 per month (September 2016 figures), but you need to report it under the Real Time Information system. If you don’t do this in any one year, then you may have wasted some Personal Allowance and the cost to you may be 676 x 12 x 20% = £1,622.40.

As another example, you can declare a dividend of £5,000 after corporation tax which is tax free. You need minutes and a tax voucher to do this, and if you don’t do it then there is a prospect that you will pay £5,000 x 20% = £1,000 in additional surtax in a future year.

An early meeting with an accountant is therefore worth about £2,622.40 to you. Even if these calculations are not quite right, there will be some other reason to justify this sort of valuation. Our typical fee is likely to be just a fraction of this. For example, if your company turnover and profit were £14,632 which is just enough to pay the salary and the dividend, then our annual fee would be in the £560 area for a small company with one director’s tax return and a payroll scheme. Please do get quotations from other accountants as well, but don’t fail to act at all until it is too late!

We are keen on the use of new technology, and this new-style mobile-friendly website is an example. We use other advanced technology so we can prepare accounts quickly. This means fewer chargeable hours to make us affordable, and greater ability to cope with tight deadlines which we will need to be specialist company accounts.