legal, united-kingdom, ltdI have started a LIMITED company in the UK with myself as the Director and the only share holder (of which there are 1 shares valued at £1.00). I have set this business up as a way to take payment for freelance web design projects as well as learn about business, the legalities and the finances.
A couple of questions I have are:
1.) Do I need to setup a bank account for the business? Or can I use a personal bank account? And regarding the capital in the business, do I need to then show where the £1.00 lives that I mentioned when incorporating the company with companies house?
2.) Do I only need to send in revenue details and tax returns once I have actually started trading? As I don’t have a date for when I will complete my first project and take payment. Apparently I have to tell HMRC 21 months after the company is incorporated.
3.) If I setup another bank account, do I just send the statements to HMRC to show what money is in the business and what has gone in and out for that year, so in effect show no money has gone in or out in some cases.
As a general rule, always try and separate business and personal bank accounts. Even if the business is a Limited Company, LLC, partnership or sole trader.
It is considered good practice to have a separation of “business” money from “personal” money, and for things like wage payments and dividend payments, unless there are multiple bank accounts you have no hope to show the movement of these monies.
It was 13 years ago when I set up my UK Ltd company, so I’m not up on the current rules. We have benefited by the advice of an account friend over that time whose fees have saved us significantly. On your second question, I would find an accountant and ask them. I would suggest don’t phone up the HMRC and ask the question, as if they misunderstand you or you misunderstand them, and make an incorrect action, it is still your fault.
Since it is a limited company, you will need to appoint an accountant at some point. The accountant will do annual accounts for the company and submit to the Company’s House/HMRC. If you do not trade, the accountant will file as a dormant company. So:
Open a company account. Do not use your personal one.
Your accountant will do this. If no trading, it will be filed as dormant. Discuss this with your accountant.
No. All details will be sent to your accountant who will then prepare accounts for HMRC & Company House in the required format.
Guy, one advice:
The advice given below is all excellent. I have a Ltd company since 1994 and had a few audits during those years. The law (and taxman) will not take kindly if you screw up your responsibilities and claim ignorance, or that you were “just learning” when professional advice is available. If you cannot afford it then you either are not charging enough for your time/projects, or you are running a business against the public interest (which is illegal). And consider points 1,2,3,6 and 7 of an earlier answer I made https://startups.stackexchange.com/questions/8576/how-to-build-a-startup-freelance-software-qa-in-the-us/8585#8585
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