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Setting up a company (costs)


Lampwick
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I had a meeting with an accountant recently and was given the following charges to set up a limited company;

 

Registration with Companies House £200

VAT Registration £150

Or both for £300

 

Then annual accounts from £800 to £1200 depending on how bad I kept my records!

 

I was planning on using their address as the formal business address too. I presume they want something for this but expected that to come into the annual charges

 

Now I'm not wanting to undermine their profession and pay a reasonable sum so am I missing something?looking at the prices online doing it my self would be a blinkin site cheaper and not complicated.

 

Any help welcome

 

Cheers

Edited by Lampwick
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It's virtually free to register a company online

I've registered both of mine and accepted an incentive to open a Barclays Bank account which meant that I paid £35 but got £50 back once account was opened.

Will find exact site if you are interested.

Thanks that would be useful.

Have a look at LLP's. Much cheaper and fewer requirements. There's agencies out there who will sort the partnership train as well.

Will do thanks.

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Their charges for annual accounts seem quite reasonable (if it includes the tax return) - my accountant said it would cost about £2000 for annual accounts if I registered as a company compared to £500 for a sole trader.

Yes I'm ok with the annual cost it's really the set up ones which appear heavy and are making think it's either more difficult to DIY it than I think it is or I'm missing something else included. I may need to call them.

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Have a look at LLP's. Much cheaper and fewer requirements. There's agencies out there who will sort the partnership train as well.

 

LLP's and Ltd Co's have broadly similar set up costs and annual reporting requirements, but they are completely different in the way they are taxed. What is a partnership train?

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It depends how complicated your accounts are. If they are fairly simple and you can handle doing a balance sheet then do them yourself and use an online service to file the iXRBL (cheap accounting £90). Or get a package like DIY accounting to submitt yourself. The companies house bit is v.easy (as long as your balance sheet balances).

 

At the end of the day if your balance sheet balances and you havn't taken any money out that wasn't taxed (corp. or paye), then there isn't much else an accountant can do for you. At least if you do it yourself you learn how to do it properly and you then develop a system whereby if you do get investigated you can put your finger straight on the right paperwork. You'd be amazed at how many accountants look blankly when questioned, or even report their clients if they suspect anything dodgy (as they are legally required to do).

Edited by rocksaplenty
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Setup charges can be done quite cheaply as others have mentioned, check online.

 

With regards specific accountants annual charges you may find it useful to employ their services for the first year or two (or more). This will give you a format to work from and they will hopefully have given you some history with the IR.

 

Preparing accounts and company tax returns is easy on the face of it, but it isn't, if you follow me!

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Firstly do the whole registration thing yourself. What your paying for at an accountants is generally a clerk to put stuff together and a partner or qualified manager to sign it off (unless you or you company carry some weight). I cant comment too much further as I married the accountant, which is a sort of clever and dumb move all at the same time if you get my drift :rolleyes:

I am a bit out on registration costs but its always seemed very cheap when I have done it, Ltd is the way to go as long as their is risk involved. You still have to act correctly but it protects personal assets if things go bad, also suppliers often get the jitters when sole trader ships and partnerships change to Ltd so with a workable plan better do it at day 1 IMO.

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Thanks so far folks.

 

I've decided to register myself but use the accountants for the returns.

 

However I am stuck at The Capital stage!

 

Both myself and wife will be Directors and I have been advised to go with a 70/30 split in my favour on 100 £1.00 shares.

 

Any ideas what I put in the section below?

 

And do I need to have model articles?

 

I've presumed;

 

  • Ordinary shares
  • 100 of them
  • Valued at £1.00 each
  • Zero on unpaid but no idea why???
  • £100 on aggregate
  • NO idea on prescribed particulars other than;

 

Each share has full rights in the company with respect to voting, dividends and distributions as determined by the shares listed below;
Shareholder "X" gets 70 shares
Shareholder "Y" gets 30 shares
ANY help would be appreciated.
Cheers
​SORRY RE THE CUT & PASTE ! it didn't go to plan!

 

Add share capital

Currency required.gif

GBP - Pound Sterling EUR - Euro USD - US Dollar JPY - Yen ARS - Peso AUD - Australian Dollar BRL - Real CAD - Canadian Dollar ----------------------------- A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Class of share required.gif

Number of shares required.gif

Amount paid up on each share required.gif See note 1.

Amount unpaid on each share required.gif See note 1.

Aggregate nominal value required.gif

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This should be the number of shares multiplied by the nominal value of each share. A value up to 3 decimal places can be given.

Enter prescribed particulars in the box below (See note 2.)

You can choose to keep the statement shown if it is suitable for your company, or you can over-write with your own statement.

Prescribed particulars required.gif

close.jpg

These set out whether or not: i) a shareholder gets a vote (and how many), ii) a shareholder is entitled to a payment of a dividend, iii) a shareholder has preference over other shareholders in the event that the business is closed or bankrupt; and, iv) the terms and conditions relating to any redeemable shares (not applicable for companies without this share type). See note 2 for more information.

A maximum of 4,000 characters can be entered

Edited by Lampwick
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Based on what you have said, you are on the right lines for a 70/30 split company. Your answers should be:

 

Class of Share: Ordinary £1.00

Number of shares: 100

Amount paid up on each share: £1.00

Amount unpaid on each share: Nil

Aggregate nominal value: £100

 

You don't need to list the spit of shares in the prescribed particulars part, you just need to list the particulars for each share class, in your case there is only one class, Ordinary £1.00. Details of acceptable wording for the prescribed particulars are in the link below:

 

http://www.companieshouse.gov.uk/infoAndGuide/faq/prescribedParticulars.shtml

 

A couple of other points to consider. You don't have to have your home address shown on the public record if you don't want to, you can use a service address, which is usually the registered office of the company.

 

By only having one share class, any time you vote a dividend, your wife will effectively receive 30% of the total dividend. You won't be able to make a distribution just to yourself, unless you take it out as a salary or bonus under PAYE.

 

Make sure you get the company registered for VAT, PAYE and Corporation Tax with HMRC.

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With regards to registering for VAT, it is my opinion that you are best to only do this one you have to - though this is industry dependent somewhat.

 

It is. Also the pain factor depends a lot on whether you have lots of little transactions, or fewer, larger ones.

 

But then depending on costs and how much VAT you pay out, the flat rate scheme (for which you can register voluntarily) can actually make you money. It does me for sure and I love it.

 

Google VAT flat rate scheme, OP.

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As a retired accountant I have only just seen this thread.

 

How wonderful that we have someone that has now formed their own company and we have no idea what the business is, his or her personal circumstances, finances, future plans, family, dependants etc. Is a company suitable or would he be better as a sole trader or partnership or an LLP as has been mentioned? Taxation has only been touched upon in the most limited way.

 

As soon as any finance is required in terms of overdraft, loan or whatever the bank will not be happy unless a reputable accountant is involved who will be needed to put forward sensible cash flow forecasts and projections for the business.

 

LLP and Company accounts are required to be prepared in accordance with prescribed legal formats and in accordance with UK GAP (General Accounting Principles). These are normally beyond someone not trained in their preparation. Fines are readily available for late submission and errors in accounts and the same applies for late VAT returns and tax returns.

 

Using an accountant should help steer you through this veritable minefield and he should encourage you to be self sufficient as far as possible in terms of keeping books, doing VAT returns etc. A good accountant won't want you to be a disorganised mess as it will cost a fortune to put it right and you won't be happy to pay his bill to do it.

 

As to accountants they are many and varied. There is no requirement to have a qualification to call yourself an accountant so there are some unqualified people about some of whom are fine but some are not. Chartered Accountants have been mentioned which are probably the best. Talk to your local suppliers, lawyer, bank staff for suggestions as to a reputable one in your area. Get quotes from a few and use their free hour to find one that suits and that you can get on with. Personal recommendations from people you trust are best. If you pick a "dodgy" accountant so far as HMRC is concerned then expect to be investigated at some time - someone reputable will ease your life with HMRC as they should ensure that everything is done properly and accounted for.

 

As to charges these vary widely. A one man band that you can never speak to because he is too busy and never gets anything done for you may not turn out to be as cheap as he seems. A larger firm with a partner, manager, senior and assistants will provide more support. Even larger firms will be departmentalised for small businesses, corporates like companies, LLP's, firms requiring an audit and with separate departments for tax etc. They will probably have specialists for VAT, Financial Services, Insolvency, provide bureau payroll services, tax investigations etc. You will soon get to to know that you don't have to speak to the top man for every query. Costs reflect the time and complexity of your work so a small business will cost less than a large one but if you make it complex then that can add to cost. Provide everything at once to do the job so that he doesn't keep having to pick up and put down the work because he gets stuck due to missing information which adds to his time and costs.

 

I was a partner in a large regional firm with roughly 50 partners and 400 staff spread over 8 offices. Compared to equivalent local solicitors we were considerably cheaper! Your accountant will tell you when you need a solicitor but use your accountant to set up companies, LLP's etc if you don't know what you are doing. Once you trade through a company the money in it is no longer yours and you can't just take money out at will to pay the housekeeping and spending money. The accountant will delegate the work to be done down to appropriate staff but it will be checked to keep it cost effective. Get quotes and be sure to comply with the rules of the quote. If the accountants expect properly balanced, mathematically accurate books reconciled to the bank account and VAT returns etc then if you don't do that he will charge more to sort it out because it will take much more time to do.

 

The accountant may well suggest that you have a bookkeeper to do the bookkeeping on a part time basis as you should concentrate on what you are best at which is your business generating sales, providing services or whatever it is that you do.

 

As I'm retired I regard myself as out of date on tax and costs but hope that the principles expressed above will be useful.

 

An accountant owes a duty of care to his client and as such has to know his client inside out to do his best for his client so initial questioning of you by your accountant should be thorough. It is important. He is also obliged to go through Money Laundering procedures with you just like when you open a bank account etc which is a necessary evil I'm afraid in trying to find crooks, terrorists and drug dealers etc.

Edited by Abacist
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