First board meeting of directors
This is a useful exercise if your company has more than one director because it gives you the chance to formally discuss the new business. At the meeting, you can refer to the rules and regulations outlined in the articles of association, allocate duties and responsibilities to each director, formalise a business and marketing strategy, confirm important filing dates, etc. The purpose of the meeting is simply to get all your ducks in a row - to make sure you all know what you’re doing and are in agreement going forward.
Prepare statutory company records
A lot of company formation agents provide digital or printed statutory company registers with first entries during the incorporation process. These registers hold information about the company and the people who are involved with it:
- Register of members
- Register of directors
- Register of directors’ residential addresses
- Register of secretaries
- Register of people with significant control (PSC register)
- Register of mortgages and charges
You will be responsible for keeping these records up to date at all times and storing them at your registered office or a single alternative inspection location (‘SAIL’ address). The public has a right to access these registers upon request.
Open a business bank account
You will probably need a separate business bank account in your company name. This is not a legal requirement but it makes more sense than using your own current account for business income and expenditure. There are lots of great deals out there for new companies, so take your time to compare different accounts before making a decision.
Register for business taxes
If your company is going to start trading immediately, you will have to register for taxes. This is done online through HMRC. All active companies have to register for Corporation Tax, which charged at a flat rate of 20% on all taxable income. You must register no later than 3 months from when you start trading.
VAT registration is mandatory for businesses with an annual taxable turnover above £83,000. Below that sum, registration is optional. There are a few benefits to voluntary VAT registration, so it’s worth considering if you pay VAT on business-related purchases.
Register for Self-Assessment
Each company director will have to individually register for Self Assessment. The shareholders will also have to register, unless they are the same people as the directors. Self-Assessment is the system used by HMRC to collect Income Tax and National Insurance from company directors, the self-employed and anyone else with income other than wages from an employer, a pension or savings.
The deadline for Self-Assessment registration is 5th October after the end of the relevant tax year. So, you can essentially register after the fact. For example, the deadline for the 2015/16 tax year (which ended on 5th April 2016) is 5th October 2016. Ideally, you should register as soon as possible lest you completely forget to do it.
Once registered, you will be expected to complete your own Self-Assessment tax return every year and send it to HMRC. Paper tax returns have to be delivered by 31st October after then end of the tax year. Online tax returns should be filed by 31st January after the end of the tax year. You must also pay your full Income Tax bill and Class 4 National Insurance by 31st January.
Company address signage
Unless your company addresses are residential, you have to display your company name on a sign at your registered office and any other address you operate or trade from, i.e shop, office, warehouse, factory, studio, etc. The sign must be visible at all times and easy to read.
All official business stationery must adhere to certain rules. Your full company name, as it appears on your certificate of incorporation, should be stated on all business correspondence, documents, invoices, publicity material and websites.
On business letterheads, order forms and websites, you should also include your company registration number, registered office address, and the part of the UK where the company is incorporation (i.e. England & Wales, Scotland or Northern Ireland).
You may require certain types of insurance. If you employ people, you will need Employer’s Liability insurance. If your businesses poses any risk potential to the public, property or other businesses, you will require Public Liability insurance. People working in certain professions are legally required to have Professional Indemnity.
Other types of policies you may wish to consider include Income Protection, Director’s & Officer’s insurance and Commercial Vehicle cover. You will need Buildings and Contents insurance if you have commercial property. If you work from a home office, you should be able to alter your existing contents insurance policy to cover business items and stock.
Directors are responsible for keeping accounting records of all business-related financial activity. This includes income and expenditure, debts and liabilities, so you will need to keep receipts, invoices, purchase orders, delivery slips, till and cash machine rolls, contracts, petty cash books, bank statements, loan agreements, accounts, etc. You should retain all accounting records for a minimum of 6 years.
If you hold any board meetings (directors) or general meetings (shareholders), you must take minutes and store them at your registered office or SAIL address. Likewise, you should keep copies of any resolutions passed at a meeting. Minutes and resolutions should be kept for a minimum of 10 years.
Annual filing requirements
This is a new filing requirement that will replace the annual return process on 30th June 2016. The confirmation statement is used to report a basic overview of your company details, including the company name, registered office address, alternative inspection location, directors’ and secretary details and share capital.
You must complete a confirmation statement for Companies House once every 12 months. Changes can be made to the statement throughout the year whenever required. The filing deadline is 14 days after the anniversary of company formation, or 14 days after the anniversary of your previous annual return.
Annual accounts have to be delivered to Companies House and HMRC every year if your company is active. If it is dormant (not trading), you need only prepare dormant accounts at Companies House. There’s no need to send accounts to HMRC if your company is dormant because there won’t be any financial activity to report, thus there will be no tax to pay.
Your accounts should be filed at Companies House 21 months after incorporation. Subsequent accounts must be filed 9 months after the end of your company’s financial year (this date is known as the ‘accounting reference date’ or ARD).
If you need to prepare accounts for HMRC, they must be included with your company tax return and delivered 12 months after the end of your Corporation Tax accounting period.
Company tax return
A company tax return is used to work out how much, if any, Corporation Tax you need to pay for the previous financial year. You have to send a tax return to HMRC 12 months after the end of your company’s accounting period. Full statutory accounts must be included.
Register as an employer
If you plan to pay yourself a salary, you will be required to register with HMRC as an employer. This will be necessary even if you’re the only person working for the company. In order to pay wages to yourself or other employees, you will most likely need to register for PAYE and operate payroll. PAYE is the system that HMRC uses to collect Income Tax and National Insurance directly from wages.
Report changes to Companies House and HMRC
Companies House should be informed at the earliest possible date if you change your company details,
including the name, registered office, SAIL address, share capital and the location of statutory records. You must also tell Companies House when directors’ or secretaries details change - this includes appointments and terminations.
If you change the name or address of your business, or you appoint an accountant to deal with your tax, you must tell HMRC as soon as possible.
Additional points to note
If you do not plan to start trading when your company has been set up, or you want to stop trading for a period of time, you must contact HMRC through the Corporation Tax office to register your company as dormant. There will not be any need for you to send accounts or tax returns to HMRC during any period of dormancy.
You may wish to consider hiring an accountant or tax advisor to help with your record keeping, bookkeeping, accounting and tax returns.
If you have a business plan, it’s always a good idea to refer to it at regular intervals during the first few years of business. This will allow you to monitor your progress, ensure you’re staying on the right track, and make updates to the plan to reflect changes and new strategies.
About Rachel Craig
Rachel Craig is Head of Digital Content at 1st Formations Limited, the UK’s most high regarded company formation specialist. An expert in the industry, she provides small business advice and guidance on corporate regulation and taxation.