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You’ve set up a company – what next?

Congratulations on the formation of your new company. We wish you every success with this new venture.
The following note sets out some of the things you will now need to consider.

1. Companies Act requirements

Making changes
If you want to change any of your company’s registered details  (e.g. the registered office address or director appointments),  you must notify Companies House on the correct form. This can be done on paper forms (which you can download from the Companies House website), but is quicker and simpler to do on-line. In either case, details are available at, www.companieshouse.gov.uk.

Annual return
This is an annual re-registration of your company. You will be sent a reminder by post and the simplest way to complete the return is to go into the Companies House website and do it on-line. The annual fee is £15. It can also be done by sending in a paper form, but this takes longer and the fee is £30.

Every limited company must send its accounts to Companies House within nine months after the end of its financial year. The accounts must be in the correct format and there are significant penalties for late submission. This is something to arrange in good time with the company’s accountants.

2. VAT

The company must register for VAT if its annual sales are £67,000 or more. It is possible to register voluntarily with a turnover below that figure, and this may be beneficial in some circumstances – e.g. if your sales are largely to other businesses, or most of the goods you sell are zero rated for VAT. Most VAT registration applications can be done online. For more information go to ‘www.hmrc.gov.uk/vat/vat-introduction.htm.

3. Corporation tax

HM Revenue and Customs sends a newly formed company an Introductory Pack within six weeks of it being registered. This pack contains Corporation Tax forms and explanatory notes for new companies – including form CT41G (new company details). You should complete and send this to your Corporation Tax Office.
If you do not receive the introductory pack from HMRC or you’ve lost it, you can download form CT41G from the HMRC website. For more information, go to ‘www.hmrc.gov.uk/ct/new-company/start-up.htm.

Nine months after the end of the company’s financial year it must send a corporation tax return to HMRC, together with its accounts. This requirement is in addition to sending the accounts to Companies House.

4. Consumer credit licence

The Consumer Credit Act 1974 requires most businesses that offer credit or lend money to consumers to be licensed by the Office of Fair Trading. Your company will be affected if it:

  • sells goods or services on credit, or
  • hires or leases out goods for more than three months, or
  • lends money, or
  • issues credit cards or trading checks, or
  • arranges credit for others, or
  • offers hire purchase terms.

The Act also requires certain credit and hire arrangements to be set out in a particular way and to contain certain information. More information can be obtained at www.oft.gov.uk/advice_and_resources/resource_base/credit-licence/.

5. Bank account

The company will need its own bank account, and the first payment in will probably be the cash the shareholders are putting into the company for their shares. The need for a separate account highlights that the company is a separate legal person and its assets must always be identified separately from those of its shareholders and directors.

6. Financing the company

Most businesses require an investment of funds from time to time. When the owners put money in, they may do so by issuing shares to themselves, or the money can go in as a loan. There can be both legal and tax implications in either case. Your bank will also be an obvious source of funds, but will probably want personal guarantees against any loans or overdraft facilities it gives to your company, thus overriding the limited liability protection that applies to other creditors.

As your business grows it may seek more substantial financing from a private outside investor or venture capitalist. When dealing with such investors, care must be taken when agreeing the often complex terms on which they provide finance. Make sure you get the very best professional advice.

Your company’s business name and any other brand names you use in your business are important asset that should be legally protected. Legal protection is important to ensure that other companies do not infringe your brand name, which can cause serious damage to your company’s goodwill and trading prospects. Such protection will also be important if you ever decide to sell the business. Prospective purchasers will want to ensure they receive exclusive rights to the name. A successful brand name can become a valuable asset in its
own right, which can be sold, licensed or franchised, but only if the right to it is clearly established.

7. Company name protection

Being registered at Companies House gives some protection, but it will not stop others from registering similar company names, and a simple way of gaining extra protection is to register the company names you would like to stop anyone else from using. Such companies can be kept dormant and provide a measure of protection at little cost. Registering the name as a trade mark can confer much greater protection and should be considered, either now, or in the future, when your company’s name and reputation have become established. If you would like more information then please contact us.

8. Employing people

All areas of employment law have become more complex in recent years. It is important to comply with recruitment procedures, employment contracts, employer’s liability insurance, health and safety, disciplinary matters and dismissal procedures. As your business grows it will be important to have a staff manual and proper grievance and disciplinary procedures in place. Problems can be avoided by getting the right advice at an early stage. If you would like more information about any of these matters then please contact a member of our employment team.  We can also sign you up for our free twice-yearly employment update seminars.

9. Insurance

Even though your company will limit your personal liability in most circumstances, you need some standard business insurance in place to cover the main risks. If you take on employees, employers’ liability is compulsory, and a general public liability insurance will cover you against most accidents. These are often covered in one general business insurance policy.

If providing services to the public, you may also need to take out professional indemnity insurance and, of course, the company’s assets should also be protected.

10. Terms and conditions of business

Your interests can be protected in a number of key ways by making sure you always deal on your standard terms and conditions of business. These need to be individually drafted for your type of business and the way you conduct it. If you would like more information then please contact us.

11. Data protection

If you hold and process information about your clients, employees or suppliers, you’ll need to comply with the Data Protection Act 1998. This states that personal information must be kept secure, up to date and processed lawfully and fairly. If you process personal information you must notify the Information Commissioner’s Office unless you are exempt. This costs £35 a year, and failure to notify is a criminal offence. Notifying means you join the Public Register of Data Controllers. The Privacy and Electronics Communications regulations
apply to telephone, email and other electronic marketing methods. If you are planning a marketing campaign of this kind, you need to make sure you comply with these regulations. You can get some initial information from the Information Commissioner’s website, at ‘www.ico.gov.uk’, or please feel free to contact us.

12. Debt collection

Unless you deal only in cash, you may sometimes have customers who are reluctant to pay. Hay & Kilner has a
really efficient and cost effective debt collection service for such occasions. Contact us for more information.

13. Legal disputes

Unfortunately, disputes arise from time to time. If one does, and you need help, just let us know.

Good luck!

Setting up a new company is an exciting project, and we wish you every success. The team at Hay & Kilner is
here to provide any support you may need in the future. If you think we may be able to help at any time, please contact Jonathan Waters.


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