How much does it cost to create a limited company?

As at March 2014 it is possible to create a company for £12.99. There are many offers on the web and all the ones we have tried have been fast and efficient. We can create the company for you and it would cost more according to the amount of advice and assistance given.

What are the extra costs involved in having a Limited Company?

There are actually very few unavoidable extra costs. There the fee for filing the Annual Return of the company which can be done online for £13. Our fees for preparing and filing the Corporation Tax return are £65. The Company needs to file abbreviated accounts provided it is a "small" company. (Turnover up to £6.5M, balance sheet up to £3.26M, employees up to 50). Our accountants fee for filing this document would be £30. To evaluate whether these extra costs are offset by tax saving you can view a tax-saving chart here

Do I get greater protection as a company director?

For the director, the same responsibilities of care and correct business and financial responsibility apply as for the self-employed. Where a business has failed through some bad luck or even because the director was poor at business, the director is unlikely to be obliged to make good the losses. The director does not have a duty to be good at business. The director does however have a duty to provide additional funds to cover new deficits or to cease trading. Continuing to manage an insolvent company is classed as 'wrongful trading' if the director has taken no steps to minimise the loss incurred by the company's creditors.

Would I have any tax liabilities in transferring business to a Limited Company?

The disposal of your business to a Limited Company could in some circumstances attract Capital Gains Tax where goodwill is significant but this is unlikely where the business is relatively new and where the main asset of the business is the owner's specialised knowledge of the trade. For the self-employed person there are closing rules applying for calculating taxable profits. For the new company Corporation Tax applies to each period of account. Information on the tax differences between self-employed and limited company can be found here.