A legal structure from which a business can trade. The basic structure is that a person owns the company (known as the shareholder) and a director runs the Company. A director is typically paid a salary to run the company and at the end of the year, if there are profits remaining, the shareholders can be paid a dividend, which represents a return on their investment.
In the UK, most limited companies are known as "owner managed businesses", meaning the director and the shareholder are the same. The additional benefit for directors and shareholders is that a company has "limited liability". This effectively means creditors cannot pursue a director or shareholder personally for debts of the company (unless of course there is mischief/fraud).
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The decision to trade as an incorporated entity should always be driven by commercial factors.
This will depend on start-up funding, losses, profit extraction, capital raising and exit planning. A poor set-up could end up tax leakage (paying too much to HMRC).
These include keeping company records and reporting changes, ensuring the company does not become insolvent, filling accounts at Companies House and ensuring the company meets its VAT, PAYE and Corporation Tax responsibilities.
Several strategies available such as: extending an overdraft facility, long term/short term loans, purchasing capital equipment using leasing, hire or finance purchase terms, sale and leaseback of buildings or even a share issue
Buying competitors, setting up a new business/shop/trade, splitting out your trades in anticipation of a future sale, closing a part of your business or selling one or more business lines.
Selling shares is the simplest way to release equity. However, there are several other options available depending on your personal circumstances (for example you may wish to sell your trade but personally retain assets such as commercial buildings to generate a future income stream)
Llimited liability, easier access to financing, attract investors, invest excess Company and lower rates of tax.
Increased levels of tax and regulatory compliance, higher accountancy fees and disclosing your financials on the public domain.
Maintaining financial records, preparing financial statements, tax compliance, ensuring company doesn't become insolvent.
A combination of salary and dividends is the most tax efficient. Read our blog for a full explanation.
A kind act that could be punished with a huge tax bill! The amount of tax depends on who you make the gift to. There are some useful tax reliefs depending on your individual circumstances.
If your business has a qualifying trade and meets the SEIS criteria and/or EIS criteria HMRC will approve your application. Ongoing compliance is crucial because if you fall foul of the rules, HMRC can withdraw the approval leaving both you and your investors in muddy waters.
If you are debt free a number of options are available depending on how much the business is worth. Things will get nasty if you become insolvent (owe people money and cannot repay). A forced liquidation may be the only option.
UK corporation tax rates change from April 2023. We’ve summarised the big changes and explained the importance of working these new rates into your business tax planning. #corporationtax #business
Is your company’s year-end getting close? Talk to us about planning your year-end tasks and delivering a smooth and hassle-free year-end process. #tax #accounting
Are you donating money or equipment to a charitable cause? Make sure you’re using the right tax treatment and keeping all the correct records. #charity #donations #businesstips
knowing how much income you must generate to cover all fixed and variable costs means you can make better business plans and financial decisions for long-term sustainability and profit.
Your company is insolvent when it can’t pay the amounts it owes. If you’re struggling financially, get in touch with us sooner, rather than later.
Choosing an electric vehicle (EV) as a company car makes a lot of sense in 2022. We outline the eco and tax benefits of opting for an EV over an petrol/diesel vehicle (ICEV). #companycar #tax
Planning on taking a dividend this year? We’ve got some important advice on how to do this in a tax-efficient way, so you don’t pay a penny more than is necessary. #dividends #taxplanning
Is your startup ready to scale up? We’ll help you build a viable scale-up plan, with costings, budgets and achievable targets to meet. #businessadvice #startup
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