Jul 22, 2016
In some ways, it’s too darn easy to set up a company in the UK. Like, you can do it in 20 minutes and for less than 20 quid.
Then you’ve got this legal … thing .. you’re involved in. You start getting letters from Companies House and worse, HMRC. Her Majesty’s Shylocks are seeking their pound of flesh! Eek!
Mr. Newbie Businessman heart starts beating a little faster. His ecommerce dream has suddenly become bureaucratic reality.
Now, don’t panic. Really. No one is out to get you, personally.
When you look at how hard it is to set up a company abroad, you appreciate the British system. Give the beast what it wants and it will go away. Don’t give the beast what it wants and the worst that will happen is a series of increasing fines, which are manageable, for a business which is actually making serious money; like, not actually skint.
If worst comes to worst, you can have the company struck off and you walk away.
Here’s how to make your accounting year a smooth ride.
1. Keep Share Capital As Low As Possible.
Some people think having a 10,000 shares @ £1 ea. is the way to go. It’s isn’t. For a small company with 1 shareholder (you), 1 share @ £1 ea. is the way. Why? Because this money will have to be accounted for in your annual returns and a big sum will mess up what should be a straight tale of profit and loss. KISS (Keep It Simple, Stupid) applies here.
2.Set Up Accounts At The Companies House And HMRC Websites ASAP.
Don’t leave it two weeks before your returns are due. You have to authenticate your access, so you have to get codes from both sites to do this. They may need to be sent by post. It’s not fun waiting for the postman with the clock ticking.
3. Get Familiar With The HMRC Online Return PDF.
This is a file you download from HMRC’s website where you, if you know accounting terms, could, perhaps, just fill in your simple accounts and click ‘send’. Maybe.
For any company making decent money, get an accountant to do this. It’s good for you as the company owner to have a look at it, to make sure it’s working and have it ready to go well in advance of your filing deadline, but leave the submission to the pro.
If you don’t have this set up in advance and your accounts aren’t ready and the deadline is looming, it’s a pain. The HMRC software works well, BUT, only in an ideal PC environment. An accountant will know its tricks, you would have to learn them. Two weeks before your accounts are due is not a good time to be looking up errors online.
4. Have A Separate Company Bank Account And Try To Limit Transactions.
You can download your bank statement, give it to your accountant and leave the rest to him. Make it even easier for him and don’t order 50 items separately if you could order them all in one batch; this makes totting up easier.
Don’t mix personal and business transactions; the company debit card is not for holidays and treats. Keep your books straight and you won’t have to tell lies to HMRC’s inspectors when they call around.
Which they may do, if you start having interesting levels of turnover!