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Contact Details
Paramount Company Formations Ltd
35 Firs Avenue
London
N11 3NE
Telephone Number
020 8883 6161
Freephone Number
08000 198 698
Fax Number
020 8883 1269
Email Address
pcfltd@aol.com
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Start Up Guide
Personal Liability
As a partner or sole trader all your personal property can be taken to satisfy debts incurred in your business trading. However, when a limited company is formed the directors' salaries immediately become their personal property and cannot be claimed by the company's creditors.
Bankruptcy
If trading by a limited company should prove unsuccessful, the company can be 'wound up' and creditors can only claim property owned by the company. There are usually no restrictions on the directors if they choose to form another limited company. Under new insolvency rules, directors can now be disqualified form acting as a limited company director, although this action is very rare.
Protection of Company Name
Unlike a business name or partnership, registration protects your limited companies name. By law no-one else is allowed to use it.
Personal Protection
The Companies Act has many safeguards for your protection and all limited companies are now formed in accordance with its provisions. By law a limited company is a separate legal concern quite distinct from its shareholders and directors. The director and the company, therefore, have quite separate rights and completely separate existences.
A business name or partnership is (by law) an association of the partners and has no separate existence from them. As we shall see later, this can have a very fundamental bearing on the rights and duties of the persons involved in a business venture.
A limited company can help you in the instance of business failure and also in the instance of business success by reduction of tax.
First Board Meeting
The first board meeting of your company normally deals with a number of very important matters:
- Reporting the incorporation of the company
- Appointment of the new directors and secretary
- Establishment of the new registered address
- Appointing a company chairman, and adding other directors
- Naming signatories to the company bank accounts and stating who may use the company seal
- Allotting shares and acknowledging receipt of monies for shares
- Appointing auditors
If you don't know how to draft the minutes of the first board meeting we can advise and prepare the appropriate legal documents for your signature.
Share Capital
All our companies are formed with a nominal capital of £1,000. This means that your company will have the ability or power to issue up to £1,000 worth of shares. You do not have to pay this money to us or into a Bank. It is simply stating the amount or value of shares the company could issue if it wanted to. The more shares you issue the more you increase your liability. You need only issue one £1 share making your liability £1.
Saving of Tax
A limited company is generally strongly favoured by the taxation regulations. It is subject to tax but its profits are not normally subjected to higher rates of tax - unlike income tax. Directors do pay tax but they are entitled to claim all the usual personal allowances against their income.
The profits of a partnership are divided for tax purposes amongst the partners and they are assessed personally to tax on these amounts at once even if they have not actually drawn any cash out of the business.
With good tax planning, including the implementation of a company pension fund it is possible for your accountant to allay a considerable amount of tax and in most cases negate all corporation tax completely.
Whilst a good accountant can help you in the reduction of your tax he should also be able to assist in demolishing the old myth that the administration of a limited company costs more than any other form of business and is more cumbersome. If your accountant says that administering your limited company will cost more than you could otherwise save then perhaps you should investigate a new accountant.
VAT Registration
The VAT Registration limit is currently £62,500 per year.
Directors
There need be only one director although most companies have two. Every company must can a company secretary; if there is a sole director they cannot also be the company secretary. If there are two or more directors then one (or both) can also act as secretary.
Business Continuity
The death of a business partner ends a partnership as it then exists and the withdrawal by the relatives of the deceased partner's share could easily ruin the business.
Display of Company Name
Your company must affix or paint its name on the outside of its registered office and every office, factory or place which its business is carried out on. We can supply nameplates to comply with this law.
Value Added Tax (VAT)
If the turnover of a business exceeds the current limits for VAT registration, it must then register for VAT. If it is below the current figure then registration is optional, but it may benefit an export business, for example, to voluntarily register. If you do not know whether you need to be registered or how to register, we can advise and complete your registration for you.
Annual Return
Every company must make an Annual Return for the Registrar of Companies (the appropriate form is supplied by us within our package) along with the appropriate duty. As all companies have to lodge this form by law we are currently campaigning for all formation agencies to supply this to their customers.
At the time of publication we are the only agency to supply this most necessary of forms. Failure to file this form can result in fines of up to £2,000 and even removal of the company from the register and loss of limited liability status.