It is given, that the two things go hand in hand. You simply cannot have one without the other. If you decide to send the next rocket to the moon, you still have to complete the formalities of running a limited company. You can delegate tasks to others. That could be an accountant, your own internal finance team, but the legal responsibility is yours and ultimately the buck stops with you!
It's ‘your name over the door’ and you are responsible for ensuring that your limited company is compliant. You can’t blame your accountant if things go wrong, you can’t blame your finance team. It’s down to you.
There is a wealth of information available to people who want to start businesses and a wealth of organisations that are there to help educate you, guide and mentor you. In this blog, we aim to help you to get your ‘ducks in a row’, highlight the key responsibilities through asking some common questions, and signpost you to some organisations that can provide support if you’re unsure where to start.
Memorandum and Articles of Association
The memorandum of association is a legal statement signed by all initial shareholders and guarantors agreeing to form the company. The articles are written rules about running the company again agree by the shareholders or guarantors, directors, and the company secretary.
They cover things like the company structure, share classes, transfer and redeemability details and the shareholder decision making process. They are there to make sure there is transparency and fairness for everyone with a stake in the company and for third parties doing business with the company. Without them, there could be disagreements among the directors and shareholder.
You can write your own articles or use standard ‘model’ ones that are available via the gov.uk website. If you’re in doubt, then consult your legal representative.
The memorandum and articles are statutory requirements; public documents which are held at Companies House.
Shareholders Agreement
A shareholders’ agreement is a private contract between the shareholders in the company regulating the relationship between shareholders, the management of the company, ownership of the shares and protection of shareholders. They also govern the way the company is run.
We have seen too many companies without a shareholders’ agreement in place face difficulty when it comes to disagreements among shareholders. It may feel like a laborious and potentially expensive task to complete as you set you your new company, but at some point in your company’s future you may be very glad you did it.
It’s not a legal requirement to have a shareholders’ agreement in place, but it is very good practice to do so.
Annual Return/Confirmation Statement
The Confirmation Statement replaced the Annual Return to Companies House. It isn’t a tax document and has no connection to your company accounts or HMRC. It’s submitted shortly after your business registration anniversary. It confirms to Companies House your basic company information and ensures it is up to date.
Annual accounts and Tax Return
Annual accounts (also called statutory accounts) are filed with HMRC as part of your Company Tax Return. We advocate appointing an accountant to process these tasks for you; it’s a complicated area and if you’re unfamiliar an accountant is an essential addition to your support team.
Annual accounts are also sent to all shareholders, people who can go to the company’s general meetings and Companies House.
Account software packages are widely available and reasonably priced. Xero and QuickBooks are popular choices for SMEs. These software packages will enable you to record your income and expenditure and work out your net profit. Depending on the complexity of your operation and your confidence in your accounting it may be possible to submit your accounts to HMRC yourself, however, we strongly suggest you employ the services of an accountant to do that for you. They will prepare and submit your Annual Tax Return and calculate the Corporation Tax you are due to pay. You will of course check and sign it off before they do so. This remains your responsibility to agree it is correct.
Filing your accounts late, may result in financial penalties.
The Director Information Hub was the source of this information.
Here we signpost you to some national and local (to Dorset) organisations:
Bournemouth, Christchurch and Poole Council (BCP)
If you have found yourself in a situation where you need some business rescue advice, an initial consultation with Even Keel Solutions presents no cost or obligation. We’re an experienced team with strong values. Call us on 01202 237337.
Our download guide is ideal for both accountants and business owners. You’ll get the benefits of our 30+ years experience in one easy to read guide.
Afterwards, you’ll not only gain a better understanding of the processes, but you’ll also discover how we’ve helped hundreds of companies and provided peace of mind to countless business owners.
