Starting a NEW BUSINESS – 2024′

What is a Micro-Company and how is it different from any other Company?

A company is a legal entity separate from its owners and managers.

Limited Companies can be:

  • Public – Large Companies with the abbreviation of PLC, who issue shares at the Stock Market
  • Private – most Companies are acquiring abbreviation Ltd, whose shares are not offered for purchase by the general public.

Types of Companies by Thresholds

SizeTurnover Balance SheetEmployees
Large Company£36m or more£18m or more250 +
Medium Company£25.9m£12.9m250
Small Company£6.5m£3.26m50
Micro-Company£632,000£316,00010

Registration

Every new Company must register with the Companies House under the Companies Act 2006.

Upon registration, every Company is assigned an Accounting Reference Date (ARD).

The following conditions must be fulfilled before a Company can be registered:

–       It must have at least one Director (who can be a Shareholder)

–       Every Company must have at least one Shareholder

–       A statement of Capital must be drawn up together with the rights of the shareholders.

–       Must have the Memorandum and Articles of Association drawn up.

The advantage of being a limited company is its’ limited liability to the shareholders, making this structure a preferred choice for many businessmen.

The amount, or rather a value of issued shared, signifies this responsibility on the part of the Company or the Shareholders. In a company, a director often buys shares for only £1 at a start-up, and effectively this is the value of guarantee of the business he runs.

The director, the most important person in a sole shareholder micro company, is most often in control of the admin, and they are the only ones held responsible for keeping the company’s records, filling Annual Accounts with Companies House, and filing in Company Tax returns with HMRC.

Company Director – get this helpful guide

Private Limited Companies (most UK companies) registered with Companies House, are required to file Annual Accounts within the following deadlines:

  • New Companies – their first set of Annual Accounts within 21 months from the incorporation date.
  • Established Companies file their Annual Accounts according to their Accounting Reference Day (ARD)- which is the anniversary of the last day of the month of incorporation. This applies after the filling of the first set of Annual Accounts. For example, a company incorporated on the 15th of July will have their ARD on the 31st of July next year and every year after. Small Companies and Micro-Entities (provided they qualify) can file their accounts in an abridged form under the Financial Reporting Standard FRS105, permitting them to submit fewer details and allowing more flexibility and shorter versions.

A New Company must notify HMRC that it has started trading even if it does not make any profit.  A deadline for doing so is three months of the beginning of the accounting period. Failure to do this may result in penalties.

The UK and non-UK Limited Companies (which trade through a permanent establishment) are subject to Corporation Tax, tax on Total Taxable Profits.

Corporation Tax – what expenses to claim- Limited Companies – Check this helpful guide

Company Tax Return and payment must be submitted electronically according to HMRC Notice CT603 to deliver Corporation Tax and not later than 12 months of the end of the accounting period.

Unlike individual tax., Corporation Tax liability is not calculated by HMRC. 

Accounting Reference Date – Read More

Note: This post is regularly reviewed and updated with new information.