Limited Companies Archives - Emma Stevens Accountancy

What records do I need to keep for my limited company?

19/12/2016 By Emma Stevens

It’s essential that you keep accurate and up to date records when you run a limited company, but do you know exactly what you need to keep in order to stay the right side of the law? Here’s our guide to the documents you’ll need to keep safe and up to date.

Where applicable, you need:

The limited company’s register of members (including shareholders and/or guarantors).

An up to date register of company directors.
Copies of all the directors’ service contracts.
A register of Company Secretaries
A register of People with Significant Control (PSC) – since 6th April 2016 all UK private limited companies have to keep a PSC register with information about the people who have ‘significant control or influence’ over the company. This is an individual (either a person or registrable legal entity) who meets one or more of the following conditions in relation to your company:
- Directly or indirectly holds more than 25% of the company’s issued share capital.
- Directly or indirectly holds more than 25% of the company’s voting rights.
- Directly or indirectly holds the right to appoint or remove a majority of board of directors.
- Has the right to exercise, or actually exercises, significant influence or control of the company
- Has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
Records of resolutions and minutes of meetings.
Directors’ indemnities – security against liability claims or legal costs.
Copies of contracts that relate to purchases of company shares.
Documents relating to redemption or purchase of own shares from capital by private company.
A register of debenture holders.
Instruments creating charges and register of charges – i.e. mortgages or secured loans.

You also need to make sure that you keep copies of a limited company’s certificate of incorporation, the memorandum and articles of association and any share certificates.

Accounting records should also be kept for the following:

Any goods or services bought for or by the company
All forms of income and expenditure
All of the company’s assets, liabilities and creditrecords
A full inventory of all stock and assets owned by the business at the end of each financial year
The stock takings that have been used to work out the inventory figures
Details of companies or individuals who goods and services have been bought from and sold to, with the exception of retail sales.

The businesses financial records and business bank account statements are used by accountants to calculate your annual accounts, your corporation tax liabilities, and to prepare Company Tax Returns for each accounting period.

If your business is VAT registered, you’ll also need to keep all of your business and VAT records do that you can accurately account for all VAT transactions, and complete VAT returns.

If you’re registered as employer you have extra responsibilities; you must also keep PAYE records so that you can work out the right amount of PAYE and NICs to pay, for your annual PAYE returns, and also to show that your employees are receiving any statutory pay they are entitled to.

How do you keep your limited company business records?

The best way to keep accounting and business records is in hard copy format in a bound or loose-leaf book, and/or electronically using accounting software.

Companies House assumes that all your business records are held at your company registered office address. You might also be able to use a Single Alternative Inspection Location (SAIL) address if this isn’t physically possible or convenient. If you do use a SAIL address, you must tell Companies House where, and which records are being held there. If you move the records, you’ll need to tell Companies House, and you also have to confirm their whereabouts every time you file an annual confirmation statement.

For more advice on business record keeping and other accounting needs, contact Emma Stevens at Emma Stevens Accountancy.

All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

What are a Director’s responsibilities?

10/10/2016 By Emma Stevens

When you become a company director it is essential you understand what your Director’s responsibilities are.

New statutory directors’ duties were introduced as part of the Companies Act 2006, and this means that among other things, as a director you have legal responsibilities towards your company – not just the shareholders.

The new statutory duties that were introduced in 2006 are very similar to the previous legal obligations for company directors, but if you’re not sure about what your obligations are, it’s worth familiarising yourself with them to avoid any breaches.

In general, as a director of a limited company, you must:

Do your best to make the company a success, using your own skills, experience and judgement. For a trading company, this means that you’re expected to show an increase in the value of the company as one measure of its success.

The government also suggests that it’s up to the company directors to decide what success actually means for their own company, and The Companies Act specified a list of factors the directors must take into account in order to show that they are promoting the success of the company, including:

the likely long term consequences of any decision they make
the interests of the company’s employees
the need to nurture the company’s business relationships with customers, suppliers and others
the impact of the company’s operations on the community and the wider environment
the appeal of the company upholding a reputation for high standards of business conduct.

Make decisions about the company for the benefit of the company and not yourself.
Act within the company’s constitution and powers
Consider the interests of other stakeholders like company employees and creditors along with the interests of shareholders. So, if there was a cash flow problem, you would need to think about making sure that other people were paid what they were owed, and declaring a large dividend would be unwise.
Make sure that the company complies with all the relevant legislation
Be transparent and make sure that shareholders know if there’s any possibility that you’ll benefit personally from a company transaction.
Keep accurate and up to date company records and report any changes to Companies House and HM Revenue and Customs (HMRC) You also have to make sure that the company’s accounts are a ‘true and fair view’ of the business’ finances
File your accounts with Companies House and your Company Tax Return with HMRC on time.
Pay the correct amount of Corporation Tax
Register for self-assessment and send a personal self-assessment tax return, unless you’re director of a non-profit organisation or charity, and you weren’t paid or given any employee benefits as part of your directorship (gym membership, company car etc.).

There’s nothing to stop you outsourcing some of your responsibilities, but you are still responsible for making sure that they are carried out.

It’s essential that you know what the rules are if you become Director of a company, because you can be held personally liable for any breaches of legislation, leading to a fine, prosecution or disqualification from being a company director.

For more advice – contact Emma at Emma Stevens Accountancy Limited and I’ll be happy to help.

The importance of knowing your financial situation – all the time!

10/08/2016 By Emma Stevens

Did you know that according to research from the Forum of Private Business (FPB) in 2012, around 50 per cent of accountants surveyed by ABN AMRO Commercial Finance believed that small businesses aren’t really in control of their finances? The survey revealed that many small businesses appear to plan only for the short term and weren’t prepared for emergencies and cash flow problems. This survey really highlighted the need for all business owners, however small, to keep an eye on how their business is doing on a regular basis. If you don’t know what’s going on, how can you deal with problems?

It doesn’t take a lot of effort to get your business finances under control, and spot any issues before they crop up.

All in the plan

Do you have a plan for your business? A well set out business plan with clear financial targets will help you stay on track, and you can measure your progress against the goals you set yourself over the course of six months, a year, and five years.

Planning also helps you deal with issues as they come up instead of having to fire-fight when something goes wrong. Make a record of all your business’s financial targets, budgets, profit and loss and cash flow forecasts and review them regularly against progress.

Know where you are – right now

It’s so vitally important that you always know the financial health of your small business. Make a habit of checking your business bank account often, daily if possible, and the same with sales and stock records. Review your results against your targets on a monthly basis and see how you’re performing.

Is there enough in the account to cover rent, payroll and bills? Do you have a minimum amount that you need available in the bank to cover the essentials? Have you got enough for stock? Work out exactly what your business needs to survive, including a bit extra for unexpected expenses, and never let what’s in the bank account fall below that level.

Don’t neglect the paperwork – it’s not just a case of keeping receipts and tracking expenses but invoicing needs to be carried out regularly, and if you miss an invoice that’s money you’ve wasted through not being on top of the accounts.

Know your tax situation

You absolutely must make sure that you’re on top of the tax situation at all times, so file your accounts regularly and as early as you possibly can so that you know well in advance that your return is filed, how much you have to pay and when you need to pay it by. That way, there will be no nasty surprises. If you miss a deadline for filing returns or payments you’ll incur fines and interest on those fines, all of which can easily be avoided.

Follow up late payments

It’s a bind but if you manage your invoicing you should be able to spot late payments early on, and deal with them accordingly. Don’t feel bad about chasing late invoices, it’s your money, and you have every right to expect invoices to be paid promptly. Keeping a close eye on when your invoices are due to be paid gives you a head start in spotting problem payers and hopefully enables you to get your payment sooner rather than later.

Control your stock

If you have stock as part of your business, managing it effectively and keeping a close eye on what you have can do a lot to improve your cash flow. Look at what’s selling and what isn’t. Don’t over stock, get into the habit of buying in only what you need so that your business capital isn’t tied up in stock you might not be able to sell. Shop around for good deals and look out for discounts and special offers from wholesalers to make the most of your money.

Do you need help managing your finances?

A good accountant can support you in knowing your financial position at all times. Knowledge is power and having control of your business finances allows you to make the right decisions to drive your business forward. Check out our Gold package for all your business needs.

Pension auto enrolment for small companies

01/03/2016 By Emma Stevens

If you’re worried about the new legislation that’s recently made it compulsory to set up a workplace pension scheme for your staff, and have been putting it off – stop worrying and take action now. It’s actually a reasonably straightforward process, but if you don’t take action soon you could find that you’re in receipt of a hefty fine.

If you employ even one member of staff, you’re now responsible for enrolling them, if they are eligible, onto a pension scheme, and contributing towards it, depending on their salary. The legislation has been in place since 2012 for larger firms, but since 2015 it applies to all employers, however small.

Auto Enrolment

Although the law calls this ‘automatic enrolment’ it’s only automatic for your staff members, it’s not automatically done for you. As an employer, you’ll need to get organised and take the steps necessary to make sure that anyone employed by you is enrolled onto the scheme, if they are eligible.

If you’re already ahead of the game and have been paying into a pension scheme for your employees, you’ll now have to check that it’s suitable for the automatic enrolment scheme.

What do you need to do?

The first thing you need to do is find out your staging date. This is the date your pension duties come into force and it depends on how many employees you had on 1 April 2012. You can find this information out from the Pensions Regulator website.

Your next task is to assess your staff and work out who needs to be enrolled. This table shows you who has to be enrolled and who has the right to opt in.

Monthly gross earnings	Age			Weekly gross earnings
	From 16 to 21	From 22 to SPA*	From SPA to 74
£486 and below	Has a right to join a pension scheme ¹			£112 and below
Over £486 up to £833	Has a right to opt in ²			Over £112 up to £192
Over £833	Has a right to opt in	Must be enrolled ³	Has a right to opt in	Over £192

Figures correct as of 2015/2016. *SPA = state pension age

¹ Has a right to join a pension scheme If they ask, the employer must provide a pension scheme for them, but the employer doesn’t have to pay contributions into a pension scheme.

² Has a right to opt in If they ask to be put into a pension scheme, the employer must put them in a pension scheme that can be used for automatic enrolment and pay regular contributions.

³ Must be enrolled The employer must put these members of staff into a pension scheme that can be used for automatic enrolment and pay regular contributions. The employer doesn’t need to ask their permission. If a member of staff gives notice, or the employer gives them notice, to leave employment before the employer has completed this process, the employer has a choice whether to enrol them or not.

Make sure that all of your staff records are accurate so that you have the right information to start with; National Insurance numbers, dates of birth and salary details are all essential for working out contributions and eligibility.

Provide the Pensions Regulator with contact details for the person in charge of auto-enrolment for your business. This can be you, someone in your company, or your financial adviser/accountant.

If any of your staff members want to opt out of the scheme, they can do so, but you must give them the option to enrol and the onus is upon them to opt out of they choose to do so.

The Pensions Regulator should write to you and let you know when your staging date is; or you can work it out for yourself using the calculator tool on their website. Generally, the fewer employees you had in April 2012, the longer you have to set up your scheme, but it pays to be well prepared.

Choosing a Pension Scheme

Once you have all the information, you can find a suitable pension scheme, if you don’t already have one in place. You should do this at least six months before your staging date, and if you already have a pension scheme, ensure it’s eligible beforehand. You can check eligibility on the Pensions Regulator website:

Once you have a scheme set up, you should write to all your employees and let them know about auto-enrolment and what it means for them

How much will it cost?

To begin with, your contribution towards the scheme is 1 per cent, but this will rise over the next few years, and from October 2018 you can expect to be contributing a minimum of 3 per cent for every employee.

The exact amounts can be calculated with another tool on the Pensions Regulator website.

There are different types of pension schemes and providers available – look for a scheme run by a specialist provider and make sure that it’s compatible with any accounting/payroll software you’re using.

After the staging date

You’ll need to make sure that your records are kept updated to keep track of new staff members, salaries and contributions. You might want to invest in payroll software to help with this. Within five months of your staging date you must complete a declaration of compliance – don’t forget to do this or you could be fined.

Every three years you’ll have to go through the auto-enrolment process again, with a re-declaration of compliance – but if you’ve kept everything up to date this should be relatively easy to do.

PAYE Responsibilities – Becoming an Employer for the First Time

09/11/2015 By Emma Stevens

It’s a big step, taking on your first employee. If you’ve only ever worked for yourself in the past, or even been employed by other people, the rules and regulations surrounding PAYE, NIC and other important aspects of employment law may be new to you, so make sure that you know exactly what you need to do.

The basics

As an employer, you’ll be responsible for calculating and deducting PAYE and National Insurance contributions from your employees, and making sure it’s paid to HMRC on time. You’ll also have to pay any statutory payments like Statutory Sick Pay and Maternity Pay.

You need to ensure you keep accurate records of all payments you make. These can be requested at any time by HMRC for inspection.

Registering with HMRC

The first thing to do if you’re taking on staff is to register as an employer with HMRC. If you have already registered yourself and/or your business for self-assessment, PAYE, corporation tax or VAT you should already have a government gateway account, so registration should be fairly easy. The HMRC website has a Business Tax Dashboard which is handy for bringing together all the information from the services you use online, and you can nominate someone else to handle it for you if you prefer, whether it’s a business partner, accountant or financial adviser. All you need to do is inform HMRC of your chosen person.

You register with HMRC for PAYE up to four weeks before you have to pay your new staff members.

You do not need to register with HMRC if you pay your new staff member under £112 a week provided your new employee does not have a second job, receive any benefits or have a pension income. You still need to keep accurate payroll records and you will need to register with HMRC as soon as you pay your employee more than £112 a week even if it is a one off.

Setting up a payroll

It’s your responsibility as a new employer to set up a payroll. You’ll need software that is compatible with HMRC if you’re running the payroll for your company yourself, so that you can send the information across in real time, every time an employee is paid.

There is free payroll software available from HMRC for businesses employing fewer than nine people, or you can use commercial software. You might prefer to hand everything over to a specialist payroll bureau or an accountant if that’s easier. As long as someone is giving the correct information to HMRC, it’s fine, but as the employer, it’s legally your responsibility to make sure the information is sent, whichever method you choose.

You’ll also have to decide how much you intend to pay employees – and make sure it’s at least the current National Minimum Wage.

Employed or self-employed?

Before you take someone on, check whether the new employee will actually count as ‘employed.’ Some people, such as freelance contractors, are responsible for their own tax and National Insurance so you don’t need to include them in any PAYE calculations.

There’s a useful interactive employment status indicator on the HMRC website.

Checking up on your employees

It’s important to make sure that your intended employee(s) are legally entitled to work in the UK, and if the position they are applying for is one the requires a Disclosure Barring Service (DBS) Check, formerly known as a CRB check, make sure this is done before he or she is formally employed.

Get Insured

All employers need to have employers’ liability insurance before they can become an employer. If you already have professional indemnity or third party liability insurance check with your insurer to see if you are covered.

Paying HMRC

You are legally responsible for making all the correct deductions from your employees pay and paying them to HMRC on time. There are monthly deadlines for paying deductions, as well as Student Loan repayments or tax that has been deducted from payments you’ve made to subcontractors.

Need help with your payroll responsibilities?

Emma Stevens Accountancy offer a payroll service to customers. You can check our rates here.

Why go limited? The pros and cons of becoming a Limited Company

28/09/2015 By Emma Stevens

One of the most common questions accountants are asked by small business owners is whether it’s worth forming a limited company, and if so, how to go about it.

The two most popular trading options for small businesses are sole trader and limited company, and which one suits you best will depend very much on the type of small business you run. It’s also worth remembering that if you start out as a sole trader, it’s relatively simple to change your trading status to limited company – but not as easy to change it back again.

What are the advantages of converting your business to a limited company?

It can seem more official to people you want to do business with – the term ‘limited’ gives the company a bit more weight. If you’re looking for investors, they will be more likely to oblige if you are a limited company, as their investment is protected, whereas if you are a sole trader or partnership there’s nothing to protect any money they put into the business.

Banks also prefer limited companies when offering loans and finance, as they can take out extra security so that if the terms and conditions of the loan are broken the bank can take some of the company’s assets.

The costs of setting up the limited company will probably be outweighed by what you save in tax, as you pay tax as an employee and can set quite a low salary. You also pay tax on ‘dividends’ the company pays you as a shareholder, but not any National Insurance.

The disadvantages of converting to a limited company

Your money isn’t technically your own any more. You can’t just make withdrawals from the business as you can if you’re a sole trader, and although it might be better for you in terms of paying tax, it does make your finances more complicated. As well as this banks will still require personal guarantees from the directors, which means that the directors can still be liable for the company’s debt.

As a result, your accountancy fees are likely to go up, as the accounts for a limited company aren’t as simple as those of a sole trader.

When you start trading as limited company all of your accounts are made public, and you must keep and file accurate records of everything because if you don’t there can be penalties.

How to make the change

The process of changing to a limited company is relatively straight forward – you can do it yourself or go through an accountant/agent. The paperwork is more daunting than the cost (it’s perfectly possible to set up a limited company from as little as £4.99 online).

If your business makes a profit of at least £20,000 a year it could be worth converting it to a limited company. You should allow for costs of about £500 to £800 in your first year after setting up a limited company, and you’ll have to remember to file your accounts and send an annual return every year (which you can also do online). You can hire an accountant to take care of all the paperwork for you if you want to be absolutely sure you don’t miss anything.

Tax and National Insurance Contributions

This is where a limited company finances can start to get confusing. Once you convert to a limited company, you become a director, a shareholder and an employee of the company, and you have to set up PAYE to pay yourself as an employee.

As a director and shareholder, you enhance your basic salary with dividends, which is where your tax advantage comes from, as you won’t pay National Insurance Contribution (NIC) on dividends. Tax and NICs have to be deducted via a company payroll, which you will have to set up. You also have to pay tax and NIC’s for other staff members if you employ them.

The amount of income tax you have to pay depends on what you pay yourself as a salary as an employee of your company, and the tax bands are the same as an employed person’s income tax, including the personal allowance of £10,600 (2015-16).

Corporation tax of 20 per cent also has to be paid on any of your company profits. You (or your accountant) will have to work out how much Corporation Tax you owe and pay HMRC within nine months of company year-end.

Dividends

If your limited company makes a profit, the money can be shared out equally among the shareholders. This is called a dividend. Technically, even if there’s only one shareholder, and that’s you, you have to hold a board meeting to agree any dividend declaration, and record the minutes of the meeting in company records. It’s more a paperwork exercise than anything else but you still need to do it. It’s this sort of paperwork that can put sole traders off, but a good accountant will be able to advise you what to do.

You must keep paper records of all the board meeting minutes, as you may need to produce them if you’re subject to an HMRC investigation.

Emma Stevens Accountancy is a chartered certified accountants based in Bovingdon, Hemel Hempstead, Hertfordshire and covering Hemel Hempstead, Chesham, Kings Langley, Watford and the surrounding areas in Hertfordshire & Buckinghamshire. If you are looking for a friendly informative approach to your business and accountancy needs I am the accountant for you!