Chartered Accountants for Limited Companies in Shropshire and the UK
Starting a new business or expanding an existing business in not an easy task, which is why we are here to work with business owners to gain an understanding of what they are looking to achieve and supporting them on their journey to success.
Our limited company accounting services
We provide a range of limited company accountancy services including:
- Payroll for limited companies
- Company formation
- Company secretarial
- Bookkeeping service
- Xero Cloud Accounting
- Corporation Tax
- Annual accounts
- Management Accounts
- Business plans
- Cash flow forecasts
- Directors tax returns
Our specialist limited company accountants work with our clients to build a package of services around their individual needs.
What is a limited company?
A limited company is a form of business that is a separate legal entity to its shareholders (owners) and directors (managers).
In effect it has a separate birth certificate to its owners. The term ‘limited’ comes from the fact that shareholders are only liable up to the amount of the share capital they have invested in the business, or any guarantees that they have entered into.
The directors (who are normally the shareholders in an SME) are responsible for the day to day running of the company on behalf of the shareholders.
Directors are required to submit yearly to companies house annual accounts and a confirmation statement. They are also required to submit annual accounts and a corporation tax return to HMRC.
Limited company accounts have to be prepared in accordance with the Companies Act and are often referred to as ‘statutory accounts’.
What records does a limited company need to keep?
Both company (statutory books) and accounting records must be kept. Company directors are required by law to maintain these records, and although they can use an accountant to write up and maintain these records, the overall responsibility lies with the directors .
The statutory books include details of directors, shareholders, share transactions, share certificates and charges, as well as minutes held by the directors.
Writing up and recording the statutory books is often referred to as secretarial services. Larger companies often have a company secretary that maintains the company records but smaller companies often use their accountant to carry out this essential task.
Accounting records that a business needs to maintain are records detailing all business transactions. These include:
- Goods and services brought and sold
- Money spent and received in the bank account
- Assets that the business owns such as computer equipment and vehicles
- Money that the business is owed such as outstanding sales invoices
- Money that the business owes such as business expenses not paid for loans and payroll and corporate taxes due
Businesses also need to keep a record of the stock the business has at the end of the financial year.
The process of writing up these records is often referred to as bookkeeping.
If the business is VAT registered, then under MTD (Making Tax Digital), HMRC requires businesses accounting records to be submitted digitally.
Normally this is through using online accounting software such as Xero (internal link here). This cloud based accounting software can also automate a lot of the bookkeeping function such as importing bank statements rather than having to manually input them, saving valuable time.
Types of limited company formations:
- Private limited by shares (LTD): Typically small and medium sized businesses with owners and directors being the same individuals.
- Private limited by guarantee (LTD): Suitable for non-for profit organisations like charities, clubs and associations.
- Limited liability partnership (LLP): Partnerships that are treated as a separate legal entity.
- Public limited company (PLC): These are normally large businesses that are owned by the public and run by company directors on the shareholders behalf. Shares can be purchased and sold on a registered stock exchange.
- Private unlimited company: A company where there is no restriction on the liability of the shareholders.
- Small limited company: This is typically a company limited by shares and made up of one individual. This means that the company director and shareholder are the same person.
Most small companies opt to form a private limited by shares company, with up to four directors and shareholders.
Frequently Asked Limited Company Accounting Questions
Can an accountant set up a limited company?
In a nutshell yes, we recommend that a limited company is set up by an accountancy firm, as this will ensure that all it is correctly registered with HMRC and Companies House.
Using Spotlights incorporation service, ensures that all the records and shareholdings are registered correctly.
Why should I become a limited company?
There are many reasons why you might choose to become a limited company, but below are the our top 6:
- Tax Efficiency – in most cases small business’s trading through a limited company pay less tax.
- Separate entity – there will be a clear distinction between you and your business.
- Limited liability – as a shareholder, you will only be liable up to the amount you have invested in share capital and any personal guarantees you have entered into. Therefore, it protects your personal assets.
- Prestige – some larger businesses insist on only dealing with limited companies, as they can be deemed to be more professional.
- Share structure – shareholdings can be structured to save both you and your family tax.
- Succession planning – limited companies offer a more flexible solution for planning the future succession of your business, including offering key employees ownership.
What tax does a limited company pay?
The company pays corporation tax which is currently 19% of the taxable profits.
The tax liability is due to HMRC before 9 months and a day after its financial year end. A company tax return with the accounts has to be submitted to HMRC within 12 months of the year end.
As a shareholder, income will be extracted from the business through salary and dividend. Your salary will be processed through a payroll. However, personal tax will be due on dividends drawn out of the business.
Is a limited company the most tax efficient way for my business?
In the majority of cases yes, however it is always best to talk to an accountant about your business and your future plans to make sure that you are trading through the right vehicle for your business.
Do I need to use an accountant for my limited company?
Legally you do not need to use an accountant to run your limited company, however, from a practical point of view you will need specialist software to submit your tax return.
UK tax legislation is very complicated, so by using an accountant that is a member of a chartered association you are paying for their expertise and knowledge that will ultimately save you tax.
Does my limited company have to be registered at my home address?
No, a registered office for your limited company can be any address.
At Spotlight Accounting we recommend using your accountants address as this way any Companies House or HMRC correspondence will come directly to your accountant, giving you on less thing to think about.
Can I do my own bookkeeping?
Yes you can of course do your own bookkeeping, however the question we always pose is “can your time be utilised more effectively elsewhere?”.
By outsourcing your bookkeeping will not only save you time, but it will clear headspace so you can focus on running your business efficiently.