An overview by Sophie Renou, Accountant at Shepherd Partnership Chartered Accountants
A business can become incorporated whether it’s a partnership or sole trader. There are a number of reasons to consider incorporating a business. It can be a tax advantage due to the lower rates of tax and higher thresholds for corporation tax to income tax. Being incorporated also reduces the risk on individuals, as the company is separate to the directors (Known as ‘limited liability’, or only liable to a set amount or amount put in)
Choosing an incorporation name might seem as easy as adding a “LTD” but there are a number of restrictions and many other issues to consider. These include:
- The name can not already be in use
- It can not be too similar to another
- The name can not breach any copyright regulations
- It can’t be offensive or contain inappropriate language
- It has to have Limited or LTD in the name
- It can have a totally different trading name
There are other decisions to be made when incorporating.
- You’ll need to decide on a registered office, or the place where the company officially operates from. A ‘head office’ for example.
- You’ll also need to decide the shareholders and how many shares each shareholder has, but is important to consider the consequences share ownership brings and the potential impact on the company (Decisions and disagreements etc).
When working through the incorporation process, you’ll need to have details of the directors ready, including date of birth, job title, address, and some security questions so be prepared before application.
Finally, here are some other key bits of information you need to know:
- Registering your incorporated company with Companies House will cost £15.00
- You will need to register with H M Revenue’s online system for corporation tax detailing the date trade began
- You must notify the VAT office by completing a new VAT registration form (VAT1) and either request a new VAT number or complete a VAT 68 for the transfer of the old VAT number
- Anyone made a director will have to complete a tax return. This requires registering for self-assessment, again on HMRC website at www.hmrc.gov.uk.
This is intended to be only a snapshot of some of the key bits of information on incorporating your company. It’s always a good idea to seek advice and/ or speak to your accountant whether you are thinking about incorporation or need help with the formalities of incorporating.
The Shepherd Partnership has more than 40-years’ experience in advising local businesses on incorporation matters. If we can be of assistance please do not hesitate to get in touch. All contact details are online at www.shepherdpartnership.com.