Private limited partnerships

 Private limited partnerships

Private limited corporations are legal entities that allow you to conduct business. As such, they must be registered with Companies House and are subject to yearly filing and taxation requirements.

What is the definition of a private limited company?

A private limited company is a type of organisation that you can form to run your own business. The company is divided into shares that are owned by shareholders. A corporation must pay corporation tax on any profits and then distribute the remainder to shareholders. It is managed by directors, who are legally obligated to carry out certain tasks on behalf of the company and its shareholders.

'Restricted' signifies that the company's financial responsibility is limited to the value of the company's unpaid for shares. This means that if a corporation has one member (shareholder), and they own 20,000 shares worth £1 each, they will be liable for £20,000 (if underpaid) when the company is wound up.

What exactly does the phrase "limited liability" mean?

A limited liability company is founded on the idea that all obligations incurred by a company are the company's responsibilities, rather than the legal liabilities of the company's shareholders or directors. The directors of a limited liability company are not personally liable because all of their actions are performed as agents for the firm.

However, directors may face penalties if they engage in improper or fraudulent trade, i.e. if they act inappropriately (eg using fraudulent methods to pay creditors, overpaying themselves, using company funds for their personal benefit, etc).

It should be noted that persons who operate as directors without being properly registered at Companies House are referred to as "de facto directors" and are normally treated by the law in the same way as registered directors. A de facto director is someone who performs all of the tasks and makes decisions of a director without being formally designated as such. Read Different sorts of corporation directors for additional information.

Creating a Limited Liability Company

Select a company name and register it with Companies House. Which Companies House you register your company with is determined by the country in which it is located; for example, a Scottish company can only be formed with Scottish Companies House in Edinburgh, but an English or Welsh corporation can only be registered with Companies House in Cardiff. For additional information, see How to Register Your Company in 5 Steps.

VAT

If the company expects its turnover to exceed the current level (currently £85,000), it must register for VAT.

Compliance with the Company House

All documentation, as with company registration, must be submitted to the appropriate Companies House. All documents filed by a company based in England and Wales must be lodged with Companies House in Cardiff, whereas all documents filed by a firm registered in Scotland must be filed with Companies House in Edinburgh.

Statutory books of the company

Companies House requires you to retain and maintain your company's statutory books at your registered office or another location where they can be viewed.

Among the statute books are:

  • the company's membership registry
  • the board of directors' list
  • the list of residential residences for directors
  • the secretaries' registry (if applicable)
  • the list of charges levied against the corporation (only for charges on or before 6 April 2013)
  • Minute books containing copies of passed shareholder resolutions
    Cheap Accountants in London

people in positions of great power in the firm

You must keep precise accounting records that show payments made and received, as well as the company's assets and liabilities. They must be kept for three years from the date they were created.
submitting a list of individuals with "substantial control"
You must begin keeping a record of individuals with significant control ('PSC') on April 6, 2016. Individuals who eventually hold or control more than 25% of a business's shares or voting rights, or who otherwise exercise control over the company and its management, must be listed on this new register.
The PSC registry of a firm will be open to the public and searchable online through Companies House. PSC facts must be included in new annual confirmation statements beginning June 30, 2016. For additional information on the PSC regime, read the general advice.

Providing confirmation of receipt

Annual returns were replaced by confirmation statements in June 2016. A confirmation statement is a snapshot of general information about a company's directors, secretary (if one has been appointed), registered office address, shareholders, share capital, and key people. Confirmation statements can be made at any time, but they must be separated by at least 12 months.
Companies House will not impose any financial penalties if your confirmation statement is provided after the filing date; however, if you simply do not send one, your business may be struck off the register (ie closed down). For further information, see Filing your confirmation statement and the government's confirmation statement instructions.

Annual Accounts Submission

Each year, you must also file a set of accounts with Companies House.
These typically pertain to the 12-month period preceding the company's latest accounting reference date and include:

a profit and loss statement

a balance sheet signed on behalf of the board by a director notes to the accounts
an auditors' report signed by the auditors a directors' report signed by a secretary or director (unless the company is exempt from audit)
You must file the accounts with Companies House once they have been signed off by the directors and a copy has been given to the company's members. Existing businesses must file their annual reports within nine months of the accounting reference date. Within 21 months of establishment, new corporations must file their first set of accounts.

Read Annual accounts and tax return for further information.

Business records Every company is required to retain business records.
HMRC may audit your business records to ensure that the company is paying enough tax, that employees are being paid appropriately, and that National Insurance contributions are being made correctly. They will also want to ensure that the company is not being used for money laundering.
For further information, see Accounting and bookkeeping.
Notices triggered by an event
Other 'event driven notices' must be sent to Companies House in order for their records to be updated. Companies House must be notified when a firm changes its address or employs a new director, for example. For further information, see Other filings at Companies House.

Right to keep your home address private

Directors and individuals with considerable control of a company have the ability to have their residential address withheld from public scrutiny at Companies House.
You can seek to have your home address removed for a fee of £32 for each document you want suppressed. If you are still appointed to a living company, such as a current director, you must offer an alternate correspondence address. Your home address will be replaced on the public register as a result of this. This procedure cannot be employed if the home address has been used as the registered office address of a firm.
HMRC established PAYE to collect income tax and National Insurance contributions from employers. You have the option of:
Run PAYE yourself or hire a third-party payroll company to do it for you.
For further information, see PAYE and payroll.
Self-assessment
If the dividend income of any directors and/or shareholders from dividends exceeds £10,000, then directors and/or shareholders must file a self-assessment tax return using form SA1.
Taxes on business

Corporation tax

A corporation is required to pay corporation tax and file an annual Company Tax Return.
Within three months of beginning a business, you must provide HMRC with precise information about your company. This is something you can accomplish online. You must submit the following:
  • the day you founded your company
  • your business name and registration number
  • the primary address from which you conduct business
  • what type of business do you run
  • the deadline for filing your annual reports (the accounting reference date, given to you by Companies House)

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