How to run a Limited Company

Knowledge base from Boox

By Chris Martins D'Almeida on 8th May 2017

How to run a Limited Company

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So you are considering setting up a limited company, what comes next? Now you’re in charge, you may be wondering about how to firstly go about setting up your new business, but then there’s how you actually go about running a limited company.

You can download our free guide to setting up running a limited company by clicking the link at the top of this page.

Firstly you’ll need to consider your obligations to HMRC and Companies House, and whether the freedom to make your own decisions and the financial benefits of running a Limited Company  to outweigh the responsibilities and risks involved.

At Boox, we can set up your Limited Company for you for free when you sign up to one of our accounting services. As the owner, however, it’s down to you to know how to run your business.

Running a limited company on the move

Advantages of private limited company

The key advantages of starting a private Limited Company are:

  • Limited liability – if things go wrong, you’ll only lose what you put into the business (the share capital) unless you provide personal guarantees or are wrongfully trading.
  • Tax – a Limited Company pays corporation tax on its profits, not income.
  • Dividends – you can pay yourself a low salary topped up by dividends from the company’s profits – this can be the most tax efficient way of earning money as a contractor.
  • Flexibility – the structure has the potential for growth, so you can issue new shares, make new directors as needed, or change the company’s name in the future.

Setting up a Limited Company

To get your Limited Company up and running, you’ll need to:

  • Find a name – something that reflects what you do, but that’s not too similar to other registered companies.
  • Decide on the registered office and directors service address – do you want to keep your trading address and your personal address private?
  • Hold a board meeting to incorporate the company.
  • Determine who the person with significant control (PSC) of the business is.
  • Submit three documents:
    • Form IN01, your company registration form.
    • Memorandum of Association confirming every shareholder’s intention to hold at least one share.
    • Articles of Association  your own guidelines for managing the company.

Companies House will then send you your Certificate of Incorporation.

Running a limited company

To make your Limited Company as successful as it can be, keep a close eye on:

  • Invoicing and cash flow – make sure your invoices are correct and timely so get paid in advance of your outgoings. Decide what you’ll do if clients delay or refuse to pay.
  • Financial planning – give yourself a cushion for when you won’t be working. Plan for holidays and periods between contracts. Allow too for the unexpected, such as contract cancellations and sickness.
  • Promotion – keep your business at the forefront of potential customer’s minds. Use blogging platforms and social media opportunities to make this really cost effective.
  • Pension – Have you provided for your future? Pension contributions can be a tax efficient method of extracting money from the company. Do you need to set up an auto-enrolment pension scheme?
  • Insurance have you determined what level of professional liability insurance you need to meet the needs of your contract? Will you employ people and so require employers liability insurance? Do you need public liability insurance? Do you require any life insurance or income protection insurance?
  • Your obligations – make sure you plan for and set aside sufficient funds for your VAT , Corporation Tax and payroll taxes.

Get more information on running a limited company by downloading our guide, just click on the link at the top of this page.



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