How to run your limited company

Following on from my post on Registering for Corporation Tax you will also need to know your legal responsibilities when running your Limited Company.

Responsibilities as the Director of a Limited Company

As the Director you are legally responsible for the following below. Note that you may be liable for penalties or even prosecuted if any of these things are not done.

• Follow the company’s rules that are shown in it’s ‘articles of association’

• Keep company records and report changes

• File your accounts and your Company Tax Return

• Tell other shareholders (if any) if you might personally benefit from a transaction the company makes.

• Pay Corporation Tax

• Register for Self Assessment and send a personal Self Assessment tax return every year

Paying yourself or another person a salary

To do this you will need to register the company as an employer so that the company can pay the Income Tax, National Insurance and employer’s National Insurance contributions from the salary payments to HMRC.

What are Dividends

A dividend is a payment a company can make to its shareholders if it has made a profit. You must pay dividends to all shareholders.

If there is more than one shareholder then a meeting must take place to declare the dividends and minutes of the meeting must be kept. After the meeting the dividend paperwork should be drawn up and a copy given to each recipient of the dividend.

The company is not liable for tax on dividends but the recipients may have to pay income tax if they’re over a certain threshold.

Directors Loans

Any money taken out of the company that is not more than you have put into the company and it is not your salary or dividends payments, then you are essentially borrowing money from the company. This money will be classed as a directors loan, directors loans must be accounted for so you must keep records of these. Check the tax rules about how they are handled.

Reporting changes

If any of the information you submitted when incorporating the Limited Company changes you will need to report those changes to companies house.

You need to check your company information every year on companies house to ensure it is correct. You will get a email alert or a reminder letter to your registered office when your annual return (Confirmation Statement) is due. Check all your details are correct and file the annual return. Which will cost £13 online and £40 by post currently.