How to operate a Limited Company

HOW TO OPERATE A LIMITED COMPANY

Once you have purchased/ ordered your company from us and we have transferred to you the subscriber share(s), the next step is to appoint new director(s) and a company secretary. We will advise Companies House of these changes and complete the documentation on your behalf.

The Inland Revenue will in due course send the Registered Office a New Company Enquiry Questionnaire that we will complete on your behalf. The Inland Revenue Office will be the one most local to the Registered Office of the company and they will send us the appropriate forms.

We will also ask the Inland Revenue to set up a PAYE scheme for the company. We will assist in the preparation of the Company's payroll and calculating the necessary Tax and National Insurance due, informing you of when it is due and sending the payment off to H M Collector of Taxes on your behalf.

If you need assistance with regard to your PAYE scheme or dealings with the Inland Revenue please do not hesitate to contact us. From 2004 / 2005, we will file your PAYE year end returns electronically in order to obtain the annual government incentive.

Bank Accounts.

When opening a company bank account (which you will need) the bank will require a copy of the Certificate of Incorporation and will ask for a copy of the company's Memorandum and Articles of Association. We will provide you with copies of these documents. The Bank will also need you to supply personal identification details, such as a passport or driving licence, and utility bills.

Book keeping Requirements.

Whilst there is a statutory requirement for a company to maintain proper accounting records, there are no statutory regulations stating what precisely is meant by proper statutory records! We will assist you in setting up your accounting records on a manual or a computer system. All income invoices and expense vouchers/ receipts should be retained and filed in a chronological manner. Alternatively using a spreadsheet package such as "Excel" would be very efficient. As a client of ours, we will keep your records for you which will adhere to the stringent standards required by the Inland Revenue.

All receipts for company invoices should be properly documented and deposited in the company bank account. The only money or cheques that should be paid from the company's funds should be:

• 1 Salaries paid to staff and /or director(s) as discussed above, including PAYE tax and NI on these salaries if appropriate.
• 2 Any expenses incurred by the company itself in its business operations.
• 3 The reimbursement to a director of any company expenses that he has previously settled on behalf of the company.
• 4 The payment of net dividends to the shareholder(s).

Clearly the most flexible of the above is the dividend distribution. This should be set at a level each quarter sufficient to cover the director/ owners personal cash requirements (over and above what is not covered by his/her salary). It is important to remember, however, that dividends are a distribution of profits to shareholders, and so the company must have the profits to at least equal the gross dividend.

The Inland Revenue (tax) and Department of Social Security (NI) are very strict on funds taken from a company by its owner/director. If the funds are not covered by the four categories given above there could be costly and complicated tax implications, so, please avoid this situation at all costs. With an "on-hands" approach to your New Company we will be able to avoid this situation and address any problems immediately.