New company

[HealthEconomics]

Hi everyone,

I needed some advice. I just registered a company with two directors including myself. I also hold a full time job and am a higher rate tax payer. The other director is unemployed currently and will be doing the bulk of the work.

The other director will get a monthly salary of 620 pounds per month. I will receive none but will take some dividends at the end of the year of any is any money left.

If I have understood correctly I need to do the following -
1. Register for corporation tax - but I don't have a unique tax reference number. When will I get this and how?
2. I will need to register for paye for the other director
3. Both myself and the other director have to submit self assessment forms.
4. Annual returns and accounts need to be submitted
5. CT600 need to be submitted
6. I will need to submit nil NI every month to HMRC.

Will I receive another national insurance number as a director in addition to the one I already have?

I plan to use diyaccounting software to auto generate CT600 and annual accounts.

Is there anything I am missing?

 

[StevensOnln1]

HMRC will write to the new company's registered office address requesting details for corp tax. I believe this letter will contain the company's UTR. You only have 1 NI number, it has nothing to do with the number of jobs you have or whether you are a company director.

Sent from my GT-P1000 using UK Business Forums

 

[HealthEconomics]

Thanks for the reply. If the other director pays takes a salary then does he need to register as an employer and employee oth being him. I will just take dividends.

 

[StevensOnln1]

The company would need to register as an employer before the first pay day (you can register up to 4 weeks in advance). Make sure you run the director's wages through payroll software each month, don't just transfer the money and ignore the admin. HMRC provide their free Basic PAYE Tools program which does the job, however there is plenty of alternative commercial software (including some free ones) that offer increased functionality and integration with accounting packages.

 

[SBlundell]

Whilst I appreciate the 'spending' concern of new businesses, I would strongly recommend finding yourself an accountant especially as you are operating under a limited company.

The legislation surrounidng limited companies are very involved & invariably for some with (I am assuming!) little or no accounting experience it gets very difficult.

Plus, a good accountant should help you both with the tax side of your business (spotting pitfalls, suggesting alternatives etc) but is also an experienced business owner who can hopefully help you grow your own business.

That said, they don't have to be expensive to do so - if you can present them with tidy records at the end of each year it makes things much smoother. Plus most will happily do the payroll calculations for you, & make care of all the admin involved thereto.

However, it's best to get them on board early so you have the benefit of their advice from the word go.

Of course I'm biased I should add

To be fair - I haven't noticed that you're missing anything obvious.

Best of luck with the new venture . If you don't mind answering - what is the business?

 

[SBlundell]

what is the business?

Strike that, just see it in your profile. Presumably something to do with hosting & domains .

 

[HealthEconomics]

Hi. Thanks for the reply. It's a health economics business. I am not trying o save money by not employing an accountant. All I am trying to do is learn the basics using software - and should I all go t*ts up I will then surely employ an accountant before the year ends. We don't expect to make much enough to pay a directors salary below the threshold and some profits which we oth will take as dividends.

I plan to use - payroo for payroll and paye submissions, diyaccounting for accounts an submissions.

Leaving aside the "use an accountant" do u think these software pieces are sufficient, me knowing full well I might need an accountant.

 

[HealthEconomics]

Sorry for the spelling mistakes

 

[elaine@cheapaccounting]

Have a read of our free guide on limited company accounts here:

http://www.cheapaccounting.co.uk/free-guide-to-keeping-your-accounts.php

and then the 5 reasons why I think every company needs an accountant ....

I have been in the accountancy profession long enough to know that not everyone is a fan of spending their hard earned cash on using us to do their year end accounts and tax returns.

However there are a few reasons why I think it is essential to use an accountant to do your limited company year end accounts....

Can you keep up?
Each year brings new tax changes, forms, systems, laws etc. Have you got the time to keep up with these for the one occasion a year that you need to complete your accounts and tax returns?

How long will it take for you to find out what has changed from last year? Where will you get the information? How can you be sure that you haven’t missed something?

iXBRL
You must file your accounts with HMRC in a format known as iXBRL.
Whilst HMRC do provide a free tool to help you do this, the feedback we’ve had from some, without accounting backgrounds, who have attempted this is that it is not straight forward and does give you error messages without clear direction as to how to solve them.

Many try to use – some fail. What do you do when it all goes wrong?

Commercial Software
Of course you could buy commercial tax filing software at several hundred pounds a year to help you fill in your tax return and file the accounts. The software should be able to get you around any errors that the free HMRC system may throw up, as long as you know how to use it.

This is the type of software that a professional firm of accountants would use but they would spread the cost across all of their clients rather than you paying the whole amount yourself.

The ‘2 CT600s’ trap
Did you know that a CT600 corporation tax return can only cover a period of one year? So in your first year of trading you may need two returns as your accounting period could be just a few days over one year.

Assuming that you start to trade from the date that you formed the company, the first accounting periods runs from the date of incorporation to the end of the month following the first anniversary of the year end. It’s complicated!

Fines and Penalties
And what if you get it wrong – HMRC do not allow ignorance as an excuse. In fact their penalty regime was changed recently and says ...

“Every individual or business is expected to keep records that allow them to provide a complete and accurate return. HMRC also expects them to check with their agent, or HMRC, to confirm the correct position, if they are not sure.”

Source:
http://www.hmrc.gov.uk/agents/compliance/penalties.htm

HMRC refer to us accountants as agents – so HMRC expect you to have an accountant or to call them to confirm anything that you are not sure about. However, we all know how hard it is to get through to HMRC via their help lines and I would caution relying on the advice given.

 

[SBlundell]

It's a health economics business. ..... Leaving aside the "use an accountant" do u think these software pieces are sufficient, me knowing full well I might need an accountant.

Sorry, early morning & I confused myself - read the wrong profile . I suppose your username was a bit of a giveaway :redface:.

Anyway, I'm afraid I can't comment as I don't know much about either.

Hope all goes well

 

[HealthEconomics]

I did not want a generic answer as to why i need an accountant. It is unhelpful. What I needed in this forum were answers to specific questions. If we all need accountants and pay them then why have a forum in the first place.

 

[MyAccountantOnline]

Hi. Thanks for the reply. It's a health economics business. I am not trying o save money by not employing an accountant. All I am trying to do is learn the basics using software - and should I all go t*ts up I will then surely employ an accountant before the year ends. We don't expect to make much enough to pay a directors salary below the threshold and some profits which we oth will take as dividends.

I plan to use - payroo for payroll and paye submissions, diyaccounting for accounts an submissions.

Leaving aside the "use an accountant" do u think these software pieces are sufficient, me knowing full well I might need an accountant.

I haven't used DIY accounting myself but have had several clients who have tried to use it and haven't found it at all easy to use. Whether that's a fair representation I don't know.

I would certainly check with them that you can produce full and abbreviated accounts which can be filed online with HMRC and Companies House unless you want to use this HMRC/Companies House version. I cant comment on how easy that is to use as like most accountants we buy and use specialist software.

If you intend to use an accountant personally I wouldnt waste time and money trying to get software that may or may not work but instead concentrate on producing some really good records which you can use for your business.

 

[Scalloway]

I plan to use - payroo for payroll and paye submissions, diyaccounting for accounts an submissions.

Leaving aside the "use an accountant" do u think these software pieces are sufficient, me knowing full well I might need an accountant.

Payroll is straightforward enough to do, however company accounting is something more complicated. You can use accounting software to keep your books and prepare draft accounts. Howver you will need more software to submit accounts to Companies House and HMRC.

If you are planniing to carry on doing the submissions yourself the free software to use is HMRC's CT600. This enables you to to enter your figures and produce the accounts in iXBRL format, which is the only format accepted by those HMRC and Companies. I have completed a few CT600s as a favour for friends and as an accountant I find it a bit confusing at times. If you look through this forum you will find several threads from people who are having difficulty completing this form.

There is nothing wrong with trying to do it yourself, the question to ask is: is the time it takes you worth the loss of income from the time spent on it?

 

[Mitchells Bristol]

I did not want a generic answer as to why i need an accountant. It is unhelpful. What I needed in this forum were answers to specific questions. If we all need accountants and pay them then why have a forum in the first place.

Hello there

1) HMRC will write to you (at the registered office) with the corporation tax reference number, and you will then need to login in to the HMRC site to update your details (such as when you commenced trading etc

2) You will need to apply for a PAYE scheme in order to pay the other director £620 per month. You can do this online through the HMRC site. Providing he is on a standard tax code and has no other source of income, the payroll should be quite straightforward as there will be no tax or NIC withholdings. You will have to submit a quarterly return to HMRC stating there is no PAYE to pay if this is the case.

3) Not necessarily purely by virtue of being directors of a limited company. If you take income from the company that is not taxed at source (i.e. dividends) and this gives rise to a tax liability then yes you will need to register. In your case, as a higher rate earner it is likely you will have to register for self-assessment. Depending upon the circumstances of the other director - possibly not.

4) Correct, the annual return will be due around the anniversary of the company incorporation. The accounts will be due around 21 months from the date of incorporation.

5) Correct - CT600s are due 12 months after the financial year end. Beware of the tax payment deadlines which will be before this (depending upon the date you register and how long the first period of accounts is).

6) Covered this one under 2 - you can do it monthly, but I would do it quarterly.

7) The National Insurance number attaches to you as an individual (normally for life) so you will not get a new one.

8) Anything missing - I'll list some other things here - depends on what you are doing - VAT registration, liability / indemnity insurance, data protection registration, shareholder agreement with the other chap.

9) Whilst paying just the one director below the limits, you may find you do not need the payroll software as it will just be for year end filing. You could do this on the HMRC website, through basic PAYE Tools or pay someone maybe £50ish to do it for you.

Hope this covers everything.

 

[SBlundell]

I did not want a generic answer as to why i need an accountant. It is unhelpful. What I needed in this forum were answers to specific questions. If we all need accountants and pay them then why have a forum in the first place.

Ok, I apologise for any offence.

I thought your original answer had been suitably answered & I did confirm I didn't know of anything obvious missing. Unfortunately I don't know of the specific items of software you are referring to, so I said so.

Best of luck with the new venture.

 

[elaine@cheapaccounting]

I did not want a generic answer as to why i need an accountant. It is unhelpful. What I needed in this forum were answers to specific questions. If we all need accountants and pay them then why have a forum in the first place.

Sorry - I would delete it but I think what I have posted may be of use to others if not to you. The very best of luck with your business and DIYing your accounts.

 

[elaine@cheapaccounting]

Ok, I apologise for any offence.

I thought your original answer had been suitably answered & I did confirm I didn't know of anything obvious missing. Unfortunately I don't know of the specific items of software you are referring to, so I said so.

Best of luck with the new venture.

Oh I thought he / she meant my reply - I guess we may have both upset the poster then

 

[SBlundell]

Oh I thought he / she meant my reply - I guess we may have both upset the poster then

Oh dear. In that case, you can blame me & I'll blame you .

Never mind.

 

[elaine@cheapaccounting]

Oh dear. In that case, you can blame me & I'll blame you .

Never mind.

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