Ltd company questions

corky23

Hi all

I have set up a Ltd company and I have 3 questions

1) VAT - for my current project I will under the VAT registration limit (just) as it runs to August 2017 but I have incurred significant costs in relation to purchasing computer equipment, training courses and software (project manager) so is it worth registering to recover the VAT? The company I am project managing is VAT registered so that's OK but I am worried about the VAT admin and the VAT man.

2) Is it a real issue not to have a business bank account as my bank, First Direct, has told me this morning that they only offer personal banking? (I presume that provide I keep good records I will be OK?)

3) Finally. the date of incorporation of my company was in October 2016 so can I change this to 31.12.16 so it is easier to remember when to pay my corporation tax? any issues with the date I've picked?

Thanks very much

Apodemus

1) You need to do the maths on that one yourself. VAT isn't as scary as some folks make out but depending on the details of your business you may be better off keeping out of it.

2) You must open a business account in the name of the Ltd Company.

3) Yes, you can change your accounting dates.

foreversummer

I seriously suggest you get an accountant if you have a limited company as it is a complex set-up.

I do know it is essential to have a Business Bank Account and keep all your monies separate. Also, all of your bills, purchase invoices etc must be addressed to your company and not to you personally. It is a bit of a minefield and as I say I would have not wanted to go it alone without an accountant on board. Well worth the money you spend on one.

Foreversummer

uknick

Changing accounting date

https://www.gov.uk/change-your-companys-year-end


Bank account - I'm not sure your bank will be happy if you use a personal account for business use. Many banks charge extra for the use of a business account.

VAT registration - as said it's not that difficult to manage VAT, especially if you can register for the Flat Rate Scheme.

https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses


I know it's changing with regard to the rate used,

https://www.crunch.co.uk/blog/small-business-advice/2016/11/25/flat-rate-vat-autumn-statement/

but I think it is still advantageous for you.

booksurr

please understand that you are not the company

when the company makes and receives payments it does so in its own name, not in your name. Therefore whether a bank will allow you to set up a bank account in a company name but under personal banking T&C is doubtful

you certainly cannot use your own bank account for company transactions, you are not the company, you are merely its owner and representative. The company is a "person" in its own right with its own money. If you mix company and you in the same bank account your accountancy costs will sky rocket whilst they unpick it

the time limit for paying corp tax is 9 months (and 1 day) after the end of your accounting period so 31 Dec year end would make it 1 Oct the following year for payment. 31 Dec is not done because of CT payment dates, it is more to do with what best suits your business cycle and cashflow pattern

Pennywise

corky23 wrote: »

3) Finally. the date of incorporation of my company was in October 2016 so can I change this to 31.12.16 so it is easier to remember when to pay my corporation tax? any issues with the date I've picked?

You can choose any date you want, but remember that a corporation tax period can't exceed 12 months, so if you extend, you'll have two corporation tax returns, one for the first 12 months and then another shorter period to 31/12/17. Corporation tax is always due 9 months and one day after the CT period end, so you'd pay CT for the first 12 months around Jul/Aug 18 and then another CT payment due 1/9/18, depending on the exact dates.

If you want to keep things simple, just go with the first period to end 30/9/17, i.e. slightly less than a full year, and then full years thereafter - then you won't get confused with splitting longer periods and different CT payment dates.

xylophone

A Limited Company is a separate legal entity - you cannot pass its banking transactions through your personal account.

http://www.sjdaccountancy.com/about/resources/setting_up_business_bank_account.html

http://www.knowyourmoney.co.uk/business-current-accounts/?gclid=CN7TyJa-2NACFdU_Gwodk0AD1g might be worth a browse.

You would seem to need an accountant?

https://www.unbiased.co.uk/

TheCyclingProgrammer

If you register for VAT I would consider very carefully before choosing the flat rate scheme. Under the proposed changes, if you're caught by them and most of your costs are on services rather than goods then it's very likely it will cost you money. Stick with the normal scheme instead - it's a bit more admin but quite manageable.

As the others have said you must have a business bank account in the company name. It's not like operating as a sole trader. Company money is not your money and keeping it in your own personal account can lead to all sorts of complications and your bank won't be impressed either. HSBC arent bad for business banking.

You can easily change your accounting reference dates.

Running a Ltd company is not very complicated once you know what you're doing but I would definitely recommend an accountant. It might cost you anywhere from £750-1250 a year but a good one will save you money.

MichelleUK

You also need to consider very carefully how you take money out of your company.

An accountant will be able to advise you of the optimum salary to take to minimise your employers NIC, make sure that you will qualify for the state pension, best use of employer pension contributions and your personal tax/nic liabilities.The same goes for dividends - size, timing, paperwork etc.

Not spending on an accountant would be a very foolish economy at this initial stage, it is far more expensive to hire an accountant later to sort out the mess!

chrismac1

Note that whilst it is desirable to set up a limited company bank account, it is not a legal requirement. if someone thinks it is, kindly post up the section of the Corporation Taxes Act so we can all check this out.

I have various clients who run limited companies but not through a limited company bank account. They all have valid reasons for doing those, it's not something I would be doing myself in their shoes but it's my job to advise and their job to make the decisions.

chrismac1

Flat rate VAT - await developments. See my other posts on this topic, as usual HMRC have performed like a bunch of cluless wallies on this issue. Perhaps something more sensible will end up in law, perhaps not.

I can see about 3 different ways of keeping my 12% flat rate clients on 12% as things stand. So as per ususal HMRC have made a right pig's ear of this in terms of the Autumn Statement.

But clearly anyone now going for 12% flat rate VAT really needs to know what they are doing as there are bound to be loads of enquiries on this, many of which will no doubt clog up the VAT tribunals unless the numpty at HMRC who came up with the draft law sees some sense and changes direction for the final Bill.