• Thinking of setting up a Private ltd company... any pointers/pitfalls?

    You don't have to register accounts monthly, just once a year to HMRC. But you must do it properly and promptly as there are hefty fines involved if you don't or if you're late with them. You can do all that kind of stuff online these days so it's fairly easy once you get in the swing of things. Also you need to send in an annual return to Companies House (CH). One problem I found was that they also kept asking me for employee and PAYE returns and for a long time it was difficult to get them to understand that the company didn't have any employees (other than the non-res directors).

    I don't think having a company is any better for your image, as anyone will know that it costs about 150? (I paid about 120 but that was 10 years ago) to set up a company. I often laugh when people on Dragons' Den introduce themselves as "My name is Joe Soap and I am the Managing Director of..." So what? Anyone can be a managing director if they pay a few quid to create a company.

    There are several good reasons to create a company. These include:

    - to reduce your tax liability (probably need professional advice ref. your own individual situation)

    - to create a legal entity which is separate from yourself (this can be handy for various reasons)

    It's easy to set up a company, you can just do an internet search and find someone who offers that service. They set up the company, make the articles of association and all that guff. They usually use an associate of theirs (most likely someone else in their office) and the two of them are the directors of the new company. Then they hold a 'meeting' in which they resign and nominate you as the new director(s). Then you have to fill in a couple of easy forms and submit them to CH to notify of the change of directors. It's all quite easy but it is extra paperwork and perhaps a little daunting until you get used to it.

    Having a company might impress some people but any savvy person will know that it don't mean jack sh!t. Yes, I have one but it's not something I would do unless there were some good reasons to do so. And "image" or "looking more professional" ain't one of them. Only do it if you can justify it as a good business or financial decision. Good luck whatever you decide.

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    This article was originally published in forum thread: Thinking of setting up a Private ltd company... any pointers/pitfalls? started by mgallone View original post