Services - Company Formation

Startup Accountants for Company Formation

The biggest question you must face before you begin to trade as a company is a tricky one: what form of legal entity best suits your ambitions? While some businesses will perfectly suit remaining a sole trader and not needing to involve legal formation experts, others will benefit from incorporating a limited company with the help of a startup accountant.

 

Any UK company - whether incorporated in England, Wales, Scotland or Northern Ireland - must be registered through Companies House, and a startup accountant can best determine what legal structure is most suitable for you and your business. They can let you know all of your options, and give you the necessary information to make an incorporation decision. Give specific consideration to aspects such as tax implications and financial liability - it’s said that 90% of startups fail, so you want to ensure you’re protected against the worst case scenario.

 

To legally incorporate, you’ll need a suitable company name, an address for the company, at least one director, and at least one shareholder. You’ll then need to check your SIC code, write memorandum and articles of association, and detail the people with significant control. It’s for those last few things that a startup accountant comes in handy.

 

Each business is different, so think about which of the below structures suits your operations and discuss your options with your accountant before making your decision.

 

Limited Company (Ltd)

The most common form of incorporation at Companies House, and most suitable for small, medium or micro businesses, Limited Companies require only one person for incorporation - as long as that person acts as both director and shareholder. A Limited Company is limited by shares and owned by its shareholders.

 

The business affairs of a limited company are also entirely separate to the personal affairs of the owners, which means you are not financially liable for what happens to the company. The formation can be straightforward, but Companies House is very particular about how applications are filed so it pays to have help from someone who does it often and can flag any potential issues before the application is lodged.

Limited Liability Partnership (LLP)

Limited Liability Partnerships (LLP) tend to be used by large professional partnerships, such as accountants, solicitors and engineers. There must be at least two designated partners, and the structure is used to reduce the partners’ exposure to the financial risk of the business. The partners of an LLP are liable only for the amount of capital each has contributed. In partnerships, it is also recommended you draft an agreement to govern the relationship between the partners.

 

Limited by Guarantee Company (LBG)

Generally used by not for profit organisations, a Limited by Guarantee Company (LBG) requires only one person for set-up as long as that person acts both as director and guarantor. There are no shareholders who own the company, and there is no way to distribute dividends.

 

Sole Trader

The simplest business structure, a sole trader is responsible for paying their own tax on profits and is personally responsible for any losses the business makes. However, there are many drawbacks to operating as a sole trader. The name you choose for your business will not be exclusive to you which may make it harder for you to build your brand, it can also be harder to raise money from potential investors when you want to grow.

 

What’s next?

Once you have reached your decision your startup accountant can help you in the next steps of starting your business, which can include:

 

1.     Preparing statutory / annual accounts

2.     Preparing and filing quarterly VAT returns

3.     Preparing and filing corporation tax returns

4.     Filing the personal tax returns of the company’s directors

5.     Filing the annual confirmation statement

 

Next up: Request a free quote, find out more about us, or discover how it works.

Popular Services 

A small business accountant does more than your tax return; the best become your business partner as you grow. What else can your accountant support you with?

Payroll Services
Statutory Annual Accounts
Corporation Tax Returns
Company Formation
EIS and SEIS
VAT Returns
Request Free Quotes from Our Startup Accountants Today