Good afternoon all,
Can any of you good fellows offer up any guide/s as to the cost and complexity of setting up a Limited Company. It would be used for the purpose of carrying out Surveying services and advising house buyers.
TIA...MD
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At its very basic level you can do it on line with Companies House which will cost you £12. You’ll have to submit an annual return which will cost you £13 a year, and you’ll have to file annual accounts / corporation tax returns for which there are no charges.
You’ll also need articles of association, though you can just adopt the model ones from Companies House which will cost you nothing. If there’s more than one shareholder then you should probably document a shareholders agreement. Cost...how long is a piece of string...?
You’ll need to keep proper accounting records, though there’s no obligation to use an actual accounting package (though Xero or the like are only £5/£10 a month depending on scope. You should also have some insured - Directors and Officers, Public Liability, Professional Indemnity and maybe Employer's liability if you have anyone on payroll. You’ll need a business bank account, which most banks will do for free for at least a year or two, and sometimes longer.
Then you’re into the realms of tax and accounting advice, for which the costs will vary massively. At the very basic level you can do it yourself, it’s not that complicated and if your business is simple might well be enough. Or you’ll find that a local account / book keeper combo will do it for sub £500 a year. You’ll need to consider whether registering for VAT is needed (or mandatory if turnover > £85,000) in which case you or your accountant will need to submit a VAT return. Making Tax Digital adds a layer of complexity, as info must be submitted electronically to HMRC though for small/micro or whatever they call them now entities it’s not that onerous.
Finally you’ll also need to consider how you extract profit from the company - salary / dividends or a combination. If there’s a salary component you’ll also need to consider Ni and PAYE, which again can be outsourced for a relatively trivial amount per month - less than a tenner of only one employee. Given the requirements to submit Real Time Information outsourcing is probably essential nowadays.
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Thank you Peter. I think that has covered all bases.
Regards,
Martin.
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Great response from Peter. A couple of maybe helpful additions:
You def you do not need to buy a pre-registered company though the internet for £100 or whatever, doing it yourself really is easy and cheap
I used what is now known as the PRO package at www.crunch.co.uk/pricing/ which was fantastic. Easy to generate invoices, payroll, automatically produced my accounts and other returns, easy expenses management and gave good support and advice (though obviously only about the business, not IFA type advice) - I'm sure others offer similar services but they come recommended.
Depending on your circumstances I found a really tax efficient method to extract the money was to pay myself the max untaxable and no NI salary (c £12k now I think) then the company paid into a pension with the remainder (up to £40k a year but you used to be able to use 3 years previous if unused). You pay no corporation tax on it and when you get it out of your pension 25% is likely to be tax free (but get your own advice).
The insurances Peter mentions are important too.
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MD - if you are a Chartered Surveyor you need be to aware of RICS regulations about setting up a firm. If you need advice let me know.
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Please avoid Xero if using an accounts package.
Whilst some features are good (inviting others to review accounts for example). I have always found it tiresomely slow. I also found it very difficult to customise reports.
Sage offer some good packages for small businesses.
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I 'may' appreciate advice and no I am not a Chartered Surveyor. Are you in that profession Sir?
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I am. But if you are not then my comments don't apply. However i assume you have or will have Professional indemnity insurance?
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.... and the other insurances Peter mentioned earlier - all are essential IMO.
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A son ran his own company for 14 years - 1 employee of his company. His customers insisted that they dealt with a limited company and not an individual.
He did not do any book keeping - a local accountant "did the books" He provided copy invoices, bank account printouts etc etc - Accounts, PAYE, VAT returns, company accts, companies house returns, tax returns + his own tax affairs.
It cost him £1200 a year. He only had 2/3 customers in any one year BUT the fact that all the papework was spot on it was worth every penny.
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My son is a freelance cameraman/sound-man/editor; he was, for some years, acting as a sole-trader. Every year, he would phone me in a blind-panic asking to borrow a couple of grand to pay the taxman and, every year, I would tell him that he really ought to get an accountant. It must be some 6 or 7 years ago that I got on at him suggesting that he might find a less expensive accountant if he got his books done in Suffolk rather than London which is where he was living and operating from. He was also having problems because some of his bigger clients, e.g. the BBC, wanted to deal with a vat registered, limited company.
Anyway, a couple of hours later, he rang me back and announced that he was now Haywainjr Ltd and was registered for vat. He had asked some friends about accountants and had been recommended one in London who was familiar with his line of work. Great!
He hasn't looked back, and the accountant's fees can easily be met by the money that he has saved. Of course, he is now finding a disadvantage that he hadn't anticipated - a pandemic and no work and no furlough. So dad finds himself helping out again - the only difference being that there is now a wife and baby as well!
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Yeah my accountant mate did my books for the first year then wanted £1600 pa to do my accounts. I must admit he was a one man band and was a bit of a shambles.
I found Crunch (c £800 IIRC) miles better - not even comparable - especially given the ease of doing stuff like doing my pay and tax returns (done automatically each month, they just mailed me a payslip and told me what to pay myself), raising invoices, entering expenses (phone scan if I wanted) etc - all done online - and you could produce your trading position (and draft accounts) at any time at the press of button. At end of year they did all submissions.
It really made life easy for me.
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I use a local accountant for both company and personal tax etc, but do my own VAT. Using a decent accountant helps to manage the risk of a tax investigation. This can be very bad and expensive news. I was much influenced by a friend of my brother's who spent three days locked in a darkened room with his accountant and two HMRC staff, who were less than supportive and considerate shall we say. In the end, despite the fact they couldn't find anything, he paid them off to the tune of £2.5k just to get rid of them. Well worth the £600 a year or so it costs me.
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Apropos nothing: I recall a number of years ago visiting a metalwork company in Sheffield to arrange a loan.
The owner was a likeable chap from another time and the visit was arranged by his accountant because the business needed an injection of cash.
I asked the owner what his liabilities were and he handed me a wooden tablet with a footlong spike on it. The oldest supplier invoice was at the bottom, the newest at the top!
His accountant tried ever so hard not to guffaw.
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That reminds me of a W C Fields film where he's a slapdash business man. His desk has an enormous stack of documents, which presumably require attention. At one point I think he pulls one out from the bottom of the stack.
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Limited Company - PeterS
