Company formation

If you're new to being in business on your own, starting up a limited company can seem bewildering. You may not need to use one to trade, but it can be of benefit, and not just for tax. Let's try and make the idea a bit clearer.

Think of the company as your car. You own the car, so that's like being the shareholder. You drive the car, and that's being the director. The annual service or MOT is like the annual accounts being done.

Driving the car is like doing business, putting fuel in it is like incurring expenses.

That's enough motoring analogies. If you have decided to start your own business, and have a project to begin, let us know; we can arrange for a company to be formed (you choose the name), with you as the sole director and shareholder. No-one else needs to be involved; they can be, but we can look at that once you're set up.

The next step is the company bank account. Again, we can arrange this, but you may prefer to use your own bank. Make sure they give you free banking for at least twelve months.

That's it! You can start work; but remember, you are working for the company, so it's the company that needs to raise the invoice and receive the money. As when you were employed, you can claim certain expenses and be paid a salary - but as the owner of the company, you can also be paid dividends.

We will explain this in more detail once you engage us formally as your accountants.


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