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Why have a Private Limited Company?
The key point to recognise is that a company is a separate
entity - a legal person in its own right, quite separate from
those who own it (the members, usually shareholders) and those
who run it (the directors).
As a separate person a company can itself
- own property
- employ people
- act as director or secretary of another company
- enter into contracts
- sue in the courts.
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Differences between a Private Limited Company and a Public Limited Company
The main difference between the two is that a public limited company (PLC) can offer its shares for sale to the general public through a recognised stock exchange. However, a public limited company must always have at least the authorised minimum of £50,000 sterling in issued capital, a PLC cannot take advantage of many of the provisions and exceptions applying to private companies under the Act, such as audit exemptions or voluntary
strike-off.
A private limited company is not obliged to a minimum share capital. It can start up with a Share Capital as little as £ 1,- . (Increases of Share Capital are possible at any time).
When one speaks of limited companies we normally mean private limited companies.
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What is a Limited Company?
A Limited Company has limited liability for its members.
The effect of this is that, if the company is unable to pay
its debts and is put into liquidation, the members will not be
required to contribute more than they have actually paid or
agreed to pay towards settling its debts. A private company
may be limited by share or by guarantee.
The Company Secretary is an officer of the company and
responsible for its actions. This includes ensuring that any
documents which need to be sent to Companies House are sent on
time (with the exception of the company's accounts, which are
the personal responsibility of the directors).
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Who can be Company Director or Company
Secretary of a Private Limited Company?
Anybody can be appointed apart from someone who is
currently disqualified by a court from acting as a company
director or someone who is an undischarged bankrupt (except
with leave of the court).
A director or secretary can be of any nationality and can live
anywhere in the world except for occasional restrictions
imposed by the government on the activities of certain foreign
nationals.
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What documents have to be filed at Companies
House every year?
Annual Accounts: Every limited company must submit accounts
to Companies House even if it has not traded. The accounts and
reports of the company must include a director's report, a
profit and loss account (or an income and expenditure account
if the company is not trading for profit), a balance sheet.
The accounts must be approved by the board of directors, one
of whom must sign the balance sheet. The director's report
must also be approved by the board and signed by a director or
the secretary.
The financial year ends on the company's accounting reference
which is the last day of the month in which the first
anniversary of its incorporation occurs. However the company
can change this date using Form 225. A particular financial
year can be less or more than 12 months, but it cannot be more
than 18 months.
Annual Return: Companies House sends a 'shuttle' annual return
form to the company's registered office each year containing
details of the information held on the Companies database.
This should be checked and amended as appropriate. Any
additional information like changes of member details have to
be sent to companies house within 28 days of the date shown on
the form.
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Do Company Accounts have to be audited?
For accounts that end after 31 March 2004 the turnover
threshold has increased to £5.6m. The total asset threshold
is £2.8m. Profits are irrelevant.
An audit is only required if the turnover succeeds the
threshold.
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How many people are needed to run a Limited
Company?
Two: at least one company director and a company secretary. However, it is possible that a limited company acts as director or secretary. A company secretary can also be a director.
The directors are responsible for the management of the company. Since the directors can act as and for the company, they must ensure that the company does everything that it is obliged to do by law and that the decisions they make are in the best interests of the company. In this context, the interests of the company are those of the shareholders as a whole. These may be different from the interests of customers, employees, individual shareholders or the directors themselves.
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Is it necessary for Director, Company
Secretary and Registered Office to be in the UK?
The registered office must be a physical location (not a
post office box only) and has to be in the United Kingdom. The
director can be a resident of any other country. The secretary
could theoretically also live in another country, but it is
more sensible if he/she is a resident in the UK, as someone
has to make sure that the obligations towards Companies House
and Inland Revenue has to be met and that no deadlines are
being missed.
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Is it possible for a Limited Company which is
registered in the UK to have branches in other countries?
According to a European statute made in 1999 in Brussels there is a freedom of registration in all EU-countries. Therefore a limited company registered in the UK may have branches, holdings and sister companies in all EU-countries.
If you like to set up a Branch in Germany you have several options. Four of them are:
1. The Registered Branch of your Limited Company:
If you decide to have your own office in Germany and plan to operate independently from the Head Office in the UK, you need to register your Branch in the German Handelsregister (commercial register) and at the Gewerbeamt (business office).
2. The Dependent Branch :
This type does not need to be registered in the commercial register, but a notification of trade or business (Gewerbeanmeldung) is necessary.
3. The Postal Address
If you don’t want to set up a proper office in Germany you can operate with a postal address. Your business will mainly operate in the UK but correspondence can take place in Germany.
4. You can of course also set up a German GmbH, which is a German Company with limited liability. However, the amount of its share capital has to be at least 25,000.00 Euro and the set up is more bureaucratic than a limited company in the UK.
Whatever you decide, we are here to help you.
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When does a Limited Company need to be
registered for VAT?
You must register if
a) at the end of any month, the total value of the taxable supplies you have made in the past 12 months or less is more than £58,000.
b) at any time you expect that the value of your taxable supplies will be more than £58,000 in the next 30 days alone.
You can, however, apply for voluntary registration.
You get more information on customs, excise, VAT or any other taxes or duties on 0845 010 9000 (from outside the UK +44 208 929 0152) or at www.hmce.gov.uk .
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