Starting a business is exciting, and the decisions you make in the first few weeks can shape your tax bills for years. Ken Accounting helps new businesses with company formation in Uxbridge and across West London, from choosing the right structure to registering with HMRC. We agree a fixed fee up front, and your first conversation with us is free.
Sole trader or limited company?
This is usually the first question new business owners ask, and there is no single right answer. It depends on how much you expect to earn, how much you plan to take out of the business, the risks involved and how much admin you are comfortable with.
Working as a sole trader is the simplest way to start. You register with HMRC for self assessment, keep records of your income and expenses, and pay income tax and National Insurance on your profits. There is no separation between you and the business, so you are personally responsible for its debts.
A limited company is a separate legal entity. The company pays corporation tax on its profits, and you take money out as salary, dividends or pension contributions. It offers limited liability and can look more established to some customers, but there is more paperwork, including annual accounts and a confirmation statement for Companies House.
Many people start as sole traders and move to a limited company later, once profits grow. We will run the numbers for your situation rather than relying on a rule of thumb.
Things we look at with you include:
- Your expected profits in the first few years
- Whether you need to take all the profit out to live on
- Any other income you have, such as a salary or rental income
- Whether your customers or contracts require a limited company
- The extra cost and admin of running a company
If you start as a sole trader, see how we help sole traders and the self-employed.
Registering your company
If a limited company is right for you, we can help you register it with Companies House. Online registration is usually completed within 24 hours.
To register, you will need:
- A company name that meets Companies House rules
- A registered office address in the UK
- At least one director and at least one shareholder (who can be the same person)
- A description of what the company does, using a SIC code
- Details of anyone with significant control, such as owning more than 25% of the shares
Directors and people with significant control must now verify their identity with Companies House. New directors provide the personal code they receive when the company is incorporated, so it is worth doing this first.
Registering for VAT, PAYE and corporation tax
Once your business exists, there are a few registrations to get right. Missing one can lead to penalties, so we keep track of them for you.
- Corporation tax. A new company must register for corporation tax within three months of starting to do business.
- PAYE. If the company will pay anyone a salary, including you as a director, you must register as an employer before the first payday. See our payroll page.
- VAT. You must register if your VAT taxable turnover goes over £90,000 in a 12-month period, or you expect it to in the next 30 days. Some businesses register voluntarily. See our VAT page.
- Self assessment. Sole traders, and many company directors, need to register for self assessment. If you are newly self-employed, you must tell HMRC by 5 October after the end of the tax year in which you started.
We also set up your bookkeeping in Xero, connect your bank feed and show you how to record sales and expenses. As a Xero Silver Partner, we can get you up and running quickly.
Your first year
The first year sets the pattern for everything that follows. We stay in touch so you are never caught out by a deadline you did not know about.
During your first year we can:
- Keep your books or check the records you keep in Xero
- Run your payroll and pension duties if you have employees
- Advise on how much to set aside for tax
- Plan your first accounts and corporation tax return
- Help you decide how and when to pay yourself
A limited company’s first accounts are due at Companies House 21 months after incorporation, or 3 months after the accounting reference date if that is later. Our limited company accounts page explains the ongoing deadlines.
If you are setting up a UK business from India or elsewhere in Asia, see our UK business set-up page.
FAQs
When should a sole trader become a limited company?
There is no fixed profit level. It depends on your profits, how much you draw, your other income and the extra costs of running a company. We can compare both options using your own figures.
How long does it take to set up a limited company?
Online registration with Companies House is usually completed within 24 hours. Directors need to verify their identity first, so allow time for that.
Can I be the only director and shareholder?
Yes. A private limited company needs at least one director and at least one shareholder, and they can be the same person.
Do I need to register for VAT straight away?
Only if your VAT taxable turnover goes over £90,000, or you expect it to within the next 30 days. You can choose to register voluntarily, and we can tell you whether that is likely to help.
Can you help if I have already started trading?
Yes. We can check what registrations are needed, bring your records up to date and make sure nothing has been missed. You can meet us at our Uxbridge office or work with us remotely.