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Hi,
Bit of a chicken and egg thing... need to set up a ltd co before I start trading, but don't expect to actually make any money in the next 12 months (by any stretch of the imagination). But need the Co set up first.
Does anyone know, or have any links to info on, what the various costs are that are obligatory in year 1?
I can see registration with Companies House, and articles & memorandum of registration; but it's what happens after that I am interested in. Eg annual accounts.
Do I need to do audited annual accounts every year, or are there exemptions for companies that haven't yet actually had any income at all?
Done a bit of googling, but naturally enough most of the info I can find seems to be directed at profitable wheezes like IT Contracting etc with an emphasis on avoiding as much tax as possible.
many thanks
“most of the info I can find seems to be directed at profitable wheezes like IT Contracting etc with an emphasis on avoiding as much tax as possible.“
Got an ISA or pay into a pension via salary sacrifice? Both of those are tax avoidance.
I’m not an IT Contractor but have worked with loads - there are no “wheezes” that I’m aware of other than paying money into a pension - which all salaried employees can do as well.
You will need need to submit annual accounts and probably Corporation tax returns each year.
You will be able to tell HMRC you are dormant however to remove the CT obligation.
As for accounts you can submit a AA02 form for dormant accounts which means you don’t have do prepare and file ‘full’ accounts. No need for an audit until you are turning over £10m per year or so
Don't miss the deadline letters for filing, penalties come quick.
For a new private LTD you don’t have to file accounts for 21 months. Check the HMRC website. https://www.gov.uk/prepare-file-annual-accounts-for-limited-company
The requirements for having accounts audited depends on a number of factors, again check the HMRC website.
You need to keep good records as even if you don’t make a profit in the first year , you will want to roll forward any losses.
Good luck.
Our ltd co ran on a shoestring budget, and that included VAT registration too. There was something about needing to use (commercial) proprietary software for some of the tax admin, my wife deals with that and I can't remember what happened in the end. We have certainly never paid anyone else for admin or audit of any sort, the bank account costs a few quid a month and we also got insurance because a contractor demanded it (same reason we're VAT registered, we aren't over the threshold but an overseas contractor couldn't cope with this concept).
Post-brexit it's dormant of course, that's a few tens of thousands of pounds of tax lost to the country. Shrug. It was only a hobby for us really.
If you can get away with it, easier to be a sole trader, but perhaps your situation precludes that (as it did for us).
I hired an accountant last time I did this, which was worth every penny (and was not that expensive, about the price of a nice coffee machine).
I’m not an IT Contractor but have worked with loads – there are no “wheezes” that I’m aware of other than paying money into a pension – which all salaried employees can do as well.
well there was the base your company in a tax haven then lend money to yourself thing. Which I know at least one person was doing and I heard through the media that they weren’t alone
To the OP. What liability are are you trying to avoid with the limited company? My wife just does a tax return as a sole trader.
and was not that expensive, about the price of a nice coffee machine)
Hmm.. so somewhere between £250 and £5k. 😉
I had a Ltd. Company for 10+ years, shut it down last year. Incomings were minimal for a few years, so I went Dormant. Just an annual filing done each year, and something else to be done each year (accounts?), cant remember what it was now, took about 10 minutes a year to keep it up to date and around £30. Fimnally realised last yer that I was never going to use it, so just closed it down, took another 10 minutes or so to do the final accounts (0.00!), submitted the forms, then it was closed down 2 months later iirc.
It was very easy to set up, cost little to run it, and easy enough to shut down. All DIY able, though I would get an Accountant on board if turnover went above , say, £5k.
Actually creating a Ltd Co at Co's House is a doddle and costs a few quid. It can then sit there dormant but just don't miss any filing deadlines. I ran a very small Ltd Co for a year or two and then wound it up and didn't once pay an accountant.
Just make sure you keep receipts for everything you are putting through the Co and that you can otherwise prove the P&Ls just in case HMRC raise any queries.
My son set one up, but forgot to file once, for what was a 5 minute on-line job. A fine came in very quickly. I wound it up for him after it was dormant for a few years. All straight forward with Companies House. For a small business you can just complete the accounts filing on-line - really simpe, just make sure you keep records. Small companies won't need audited accounts.
was not that expensive, about the price of a nice coffee machine).
Why does this not reassure me 🙂
It'll be a decade or two before the company can afford any kind of STW approved coffee machine.
Many thanks all. Loads of great info.
I'm surprised at the low cost of keeping the company dormant/ ticking over. Given the urgency with which IT contractors seem to shut theirs down if they're not being used for more than a few hours 😉
Dan Heelan has done a specific video on this:
Also useful:
https://www.youtube.com/watch?v=QBXEq931h98
Heelan do my accounting - I chose them because of how excellent Dan (director)'s public education like the above is
There is no tax dodging. That's a thing of the past, or tradesmen who accept cash