3. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Overview
⢠Have to chose a structure
⢠Structure defines your legal
responsibilities
â
â
â
â
Paperwork
Taxes
How you get paid
Personal responsibilities
4. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Types of business
⢠Most UK businesses are
â Sole traders
â Business partnerships
â Limited companies
⢠Other legal structures exist for social enterprises
â Charity
â Community Interest Companies (or CICs)
6. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Sole Trader Responsibilities
⢠Personal responsibility for:
â any losses your business makes
â bills for things you buy for your
business, like stock or equipment
â keeping records of your businessâ
sales and spending
7. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Registering as a sole trader
⢠Must register with HMRC as soon as you can
after starting your business
⢠Legal stuff:
â Make a Self-Assessment tax return each
year
â Income Tax on profits and pay National
Insurance
â Register for VAT if you expect your
businessâ revenue to be more than ÂŁ79,000
a year
8. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
'Ordinary' business partnerships
⢠You and your partners âshareâ
responsibility
⢠You get a share of the profits
⢠Personally responsible for bills
and losses
⢠A âpartnerâ can be another
business
9. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Setting up a partnership
⢠Choose a ânominated partnerâ
⢠Register partnership with HMRC
⢠Each partner must register as an
individual with HMRC
â Personal tax return
â Pay income tax on partnershipâs profits and
individual National Insurance
10. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Advantages of non-incorporation
⢠Simpler for taxation purposes â no legal
need to keep accounts (though advised)
⢠Donât have to publically issue your
accounts
⢠Can withdraw cash from the business
without any tax effect
⢠Claim capital allowances, e.g. mobile
phone bill, running a car, etc.
11. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Private Limited Companies
⢠Appoint directors and register with
Companies House
â Certificate of Incorporation
â Legal entity in its own right
â Liability is limited to its members
⢠Limited by shares
⢠Limited by guarantee
12. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Limited by shares
The liability of each member is limited to the
original value of the shares issued to them
â˘A shareholder has 500 shares originally valued at
ÂŁ1 each.
â˘They have previously paid for 100 shares, ie
ÂŁ100.
â˘At the time the company fails, theyâre liable up to
the original value of shares they havenât paid for,
i.e. ÂŁ400.
14. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Before you register
⢠the companyâs name and registered
address
⢠at least one director
⢠at least one shareholder
⢠details of the companyâs shares - known
as âmemorandum of associationâ
⢠rules about how the company is run known as âarticles of associationâ
15. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
How to register
⢠online - but only if the company is limited
by shares and uses model articles of
association
â ÂŁ15
⢠by post - you must do this if you change
the model articles or use your own
â ÂŁ40
⢠using an agent
16. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Company name
⢠Must end in either âLimitedâ or âLtdâ
⢠The name canât:
â be the same as any other name on the Companies House index
of names
â contain a âsensitiveâ word or expression unless you get
permission
â suggest a connection with government or local authorities
â be offensive
⢠You may have a trading name which is not the same as
your company name
17. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Shareholders
⢠Statement of capital
â the number of shares the company has and
their total value
â names and addresses of all shareholders
⢠Every limited company must have at least
one shareholder
⢠Shareholders are owners of the company
and they have certain rights
18. ROYAL HOLLOWAY
ENTERPRISE ACADEMY
Corporation Tax
⢠Within 3 months you must tell HMRC
about your new business
⢠You will need to set a filing date, and will
be given a date when your company must
pay Corporation Tax.
Hinweis der Redaktion
Shout out their thoughts
You must choose a business structure when you start a business.
The structure you choose will define your legal responsibilities, like:
the paperwork you must fill in to get started
the taxes youâll have to manage and pay
how you can personally take the profit your business makes
your personal responsibilities if your business makes a loss
A CIC is a special type of limited company which exists to benefit the community rather than private shareholders.
To set up a CIC, you need to apply to Companies House, and:
include a âcommunity interest statementâ, explaining what your business plans to do
create an âasset lockâ- a legal promise stating that the companyâs assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders
get your company approved by the community interest company regulator - your application will automatically be sent to them
The CIC regulator has guidance on CICs, including the forms you need to set one up.
Good website is http://www.socialenterprise.org.uk/
Social Enterprise is really popular amongst Big Companies who want to be seen as Socially and Ethically Reponsible (âCSRâ)
What âsole traderâ means
Youâre a sole trader if youâre running your own business as an individual. You can keep all your businessâ profits after youâve paid tax on them.
You can take on staff - âsole traderâ means youâre responsible for the business, not that you have to work alone.
Legal responsibilities
Youâre personally responsible for:
any losses your business makes
bills for things you buy for your business, like stock or equipment
keeping records of your businessâ sales and spending
If your are irresponsible they can come after your personal assets, i.e. your house
If you register later than 5 October in your businessâ second tax year, you could be charged a penalty
Current campaign you might have seen on the tubes about âWeâre closing in on undeclared incomeâ
Essentially two sole traders working togetherYouâre personally responsible for your share of:
any losses your business makes
bills for things you buy for your business, like stock or equipment
If you donât want to be personally responsible for a businessâ losses, you can set up a limited partnership or limited liability partnership.
A partner doesnât have to be an actual person. For example, a limited company counts as a âlegal personâ, and can also be a partner in a partnership.
You must choose a ânominated partnerâ. This is the partner who will be responsible for keeping business records and managing tax returns.
The nominated partner must register the partnership with HM Revenue & Customs. When they do this, they will automatically register personally for Self Assessment.
No legal requirement for proper accounting records to be kept
These are just a few of the benefits
A private company limited by shares is owned by its members (called shareholders). The liability of each member is limited to the original value of the shares issued to them, but not paid for.
ExampleA shareholder has 500 shares originally valued at ÂŁ1 each. They have previously paid for 100 shares, ie ÂŁ100. At the time the company fails, theyâre liable up to the original value of shares they havenât paid for, ie ÂŁ400.
A private company limited by guarantee means the members of the company financially back it up to an amount agreed previously, if things go wrong. Its members arenât called shareholders.
All limited companies must be registered (incorporated) with Companies House. To do this you need:
the companyâs name and registered address
at least one director
at least one shareholder
details of the companyâs shares - known as âmemorandum of associationâ
rules about how the company is run - known as âarticles of associationâ
Shareholders are owners of the company and they have certain rights eg, directors must get shareholders to vote and agree on changes to the company.
You must tell HMRC:
the date you started in business
your company name and registered number
the main address where you do business from
what kind of business you do
the date youâll make your annual accounts up to
if youâve taken over a business or youâre part of a group