Registering A Company Name

[Frostie]

Tweet

I have been to see an accountant today, finally, to get everything kind of in order and become Ltd. Although I love letting someone else handle everything no matter what the price is, I am wondering what others have done in the past.

The proposal, amongst other things include;
'One off price for the incorporation of your business is £1,250 plus VAT'
They will also register my business for VAT and prepare my first VAT return which I presume is included in this price.

It then goes on to say;
'preparation for 1st years accounts for the new company will be £1,100 plus VAT, to include the preparation of your 2008 self assesment tax return'

Are these prices resonable?

[drivetowin]

Sounds expensive to me Chris - incorporating a business should cost no more than £150-£200, registering for VAT you can do yourself with a form that takes all of 10 minutes to complete and doing a VAT return for an affiliate business ought to take no more than 2-3 hours work once a quarter.

[Chris Clarkson]

It was 3 years or so ago now, but I think ours was £1k for first year including getting VAT number and submitting VAT returns and annual accounts. Most accountants should do you a deal for being a "start up" if you can get away with it.

Incorporating we did online for £50, took half an hour.

I was discussing something like this with Mark Russell the other day, how we should compile a list of accountants we all use who have a firm grip on what affiliate marketing is, so others in your local area can use them too. Might be worth adding to the "Providers" section?

Cheers

Chris C

[ian-d]

Definatly recommend getting an accountant to do it for you, but that price is very expensive. PM me chris, i'll give you the details of my accountant, who you may know already!

Welcome to ltd companyville, where they take 20% from you straight away

[Norras]

I recently used these guys http://www.formationsdirect.com/ to set up a new limited company.

It cost £54+vat - I ordered it online and all the paperwork came through in a couple of days. Couldn't fault them.

Cheers

Nick

[KieronD]

Yep its expensive mate. My accountants charged about £120 for incorporating a company. My VAT bill is around £200 a quarter which is worth it in my opinion mainly due to the Google Ireland VAT malarky. Also, I know you mate, and I don't think you're organised enough to do your own VAT! LOL. Take my advice, just put all your paperwork etc. into a carrier bag and hand it over to your accounant every quarter. Much easier!

[Frostie]

Take my advice, just put all your paperwork etc. into a carrier bag and hand it over to your accounant every quarter. Much easier!

EXACTLY MY WAY OF THINKING!

Well, I have taken the advice and registered the company myself. Once that info comes through (3hrs) I can then visit my Bank to change the account from sole-trader to a ltd account - maybe just a change of name on the cheque books

Once this is done, I think I may have a LOOK at the VAT registration forms, and the minute I get scared I will run to an accountant

[scifind]

EXACTLY MY WAY OF THINKING!

Well, I have taken the advice and registered the company myself. Once that info comes through (3hrs) I can then visit my Bank to change the account from sole-trader to a ltd account - maybe just a change of name on the cheque books

Once this is done, I think I may have a LOOK at the VAT registration forms, and the minute I get scared I will run to an accountant

You will probably need a different bank account - barclays insist on it - not sure if it is internal policy or legal requirement.

You need to have a word with my brother - accountant for hire - understands AM and has sensible prices. I know he has set up VAT registration for other companies

[ian-d]

Chris, just further to our PM conversation, you will need a new bank account so make sure you take your iD's and certificates with you. Because being a ltd co is different from being a sole trader (legal entity) you must have a seperate bank account, so might take a few days to get setup...i got one in a day, but am a big customer of the bank.

For anyone elses benefit, if you are taking the step from sole trader to ltd company to register for vat, bare in mind the threshold of £64k applies seperately from a Sole Trader to a LTD Co, so in theory you can 'almost' reach the £64k limit as a Sole Trader, then register as a LTD Co and start all over again. Its fully legal.

[hrbs]

A bank account in the limited company name is a must as the ltd company is a separate legal entity even though you are owner, sole decision maker and (maybe) only employee.

A limited company, under current company law, must have a director and company secretary. Typically the company secretary is spouse, parent or accountant.

Profit extraction can be a mix of wage (ie under PAYE) and dividend. In order to pay a dividend the company must have sufficient after tax profits. ie for a 10k dividend to be paid the company must have at least £12.5k pre tax profits (corp tax rate of 20%). Do not be tempted to withdraw as dividend more than this as it would be "illegal" and HMRC may class it as a salary or a loan to the director (taxable benefit in kind if over £5k) and charge tax & NIC.

Dividends must have the appropriate documentation ie directors' meeting minutes and vouchers as they are legal documents (the dividend voucher proves your income and the tax credit attached to the dividend). In this respect you have the same legal responsibilities as BT etc.

Blank directors meeting minute ~ http://hrbs.biz/id?5
Blank dividend voucher ~ http://hrbs.biz/id?6

Wage can be £420 per month to earn NIC credits without paying NIC (employers nor employees). However, to receive the online "tax free" filing incentive bonus you must pay a small amount of PAYE or NIC so an annual salary of £5200 would suffice.

see my post on PAYE schemes PAYE Schemes - sole director companies and HMRC rules at http://www.hmrc.gov.uk/employers/doitonline/9-1.htm . They are obviously upset at paying out on "nil" returns!

Bank account - this can take ages depending on the bank. Most banks offer free banking to new businesses.

Company credit card - some banks insist on a personal guarantee, but I would suggest if they do this, have a dedicated personal credit card (cashback or skycard) which is only used for business purchases.

Mobile phone, broadband etc - bills must be in company name, otherwise will be taxable as a benefit in kind (HMRC rationale is that the company is settling your personal liability).

VAT: Registration can be done online and also transfer of registration if you are already registered as a sole trader. You will need to register with HMRC online services first (it takes about 10 days for activation), or your agent can do it. I usually register my clients via my online HMRC portfolio.

Expenses: As you are now an employee the rules are much stricter, expenses must be wholly, neccessarily and exclusively incurred for business purposes. I would suggest applying for a p11d dispensation to reduce the administration and number of year end PAYE returns you need to complete. See my post at HMRC Dispensations for reporting business expense claims .

Accountants fees : Your quote seems to be very expensive if it only covers preparing the accounts. My fees can be seen at http://am-specialists.com/ . It may be that they have no idea about how your business operates and have built in a chargeable learning curve, or that they are just expensive! As others have found, there aren't that many AM-savvy accountants around.

Good luck!

Keith
High Royd Business Services Limited
Small Business Specialists

hrbsonline.com - online accounting solutions
** NEW - Accounting and taxation tips at tips.hrbs.biz **

[ian-d]

I'm glad that some of what you've taught me keith is helping others

[sgpratley]

All good advice. Do the incorporation and vat advice yourself. I was gutted when I saw how easy it was, but then our accountant charged less than half what yours is doing.

Get the new account sorted, then move everything over, it can take longer than they promise. The only advantage of having it with the same bank as your personal account is it's quicker to make transfers, otherwise you may as well be 2 different people by day and by affiliate hours.

Get yourself a cashback card with a decent limit on it for expenses (I still have my ipoints card!) as you're unlikely to get a company card with enough limit on for a while.

I can give you my accountant's number if you want a quick chat just for comparison. She's very efficient despite my useless organisation round expenses.

Lastly, don't take the piss too much on expenses in the first year or you'll have the taxman sniffing round you, but a good accountant will help you out loads. Tax avoidance and tax efficiency are apparently not the same thing :-)

[davidash]

Just as a matter of interest to anyone registering - the VAT help line is useless. Although I had an involved issue as half my earnings are from advertising for companies in France and Belgium, but billed in sterling form the U.K., I had no end of difficulty finding out if these were to be included for registration purposes. The end result is they do not, so I am not VAT registered.

Its best to write to them as you will get conflicting advice within the space of an hour from the helpline. Their notes of previous calls are inadeqaute and have little to do with what was actually said.