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General Information....
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Can I buy registers, certificates etc ?
I've heard about an Inland Revenue Form 42. Do I have to do anything ?
I am not on the mainland UK (including Scotland and Wales), can I register a company ?
There is a similar company name already. Can I have what I want ?
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Company Formation Questions....
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How much does it cost
What information do I need
Why is The Company Merchant better than other systems
Can I form the Company with just one person
Who can be a director or secretary
What is a Limited Company
Can I choose any company name I want
I want to trade under a different name to my limited company name.
I want to use the word GROUP in my company name.
I want to use the word INTERNATIONAL in my company name.
What are the authorised shares
What is a registered office
Can I change my registered office address easily
What are Memorandum and Articles of Association and do I need them
What if Companies House reject my application
Is there any other information that may help me
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After you have formed your company....
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Do I need to keep any registers
When do I need to tell Companies House about changes
I formed my company with a mis-spelt word. Can I change it
I've seen a company trading that is very similar to my name
On which documents must my company name be shown
Does The Company Merchant provide share transfer forms
How do I issue more shares
Where can I obtain information on VAT
Where can I obtain information on the Inland Revenue
How do I get a PO Box Address and should I use one
What is a shareholders agreement and do I need one
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Your Accounts....
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What period should the accounts cover
Do my company accounts need to be audited
What if I am late delivering my accounts to Companies House
What is my accounting reference date
Can I change my accounting reference date
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Closure....
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What if I no longer need my company
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| Q. |
Can I buy registers, certificates etc ? |
| A. |
Yes. We can supply company registers, blank share certificates, company seals and nameplates to everyone - whether you have formed a company with us or not. Also, if you have formed your company with us, we can also supply the official incorporation certificate (if your bank wants to see it) and prints of your original Memorandum and Articles.
Simply go to our online shop to see whats on offer. [ Top of page ]
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| Q. |
I've heard about an Inland Revenue Form 42. Do I have to do anything ? |
| A. |
Not as far as your new company formation is concerned no.
You do not need to report transactions on Form 42 for newly incorporated companies where a limited company is incorporated in the UK and the initial subscriber shares (also called founder shares) are acquired directly on incorporation, or
on transfer from a company formation agent, or from another person forming the company, for example a solicitor or accountant
The Inland Revenue have more information on the inland revenue site
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| Q. |
I am not on the mainland UK (including Scotland and Wales), can I register a company ? |
| A. |
If for example you are in Northern Ireland, you cannot use this website to form a Northern Irish company. Instead you should visit here instead.
Places such as the Channel Islands also have their own company formation facilities.
You can of course form a mainland UK company and make use of of our Registered Office mail forwarding service, however, you should always confirm with your financial adviser / accountant as to whether the tax situation is more beneficial for you or not.
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| Q. |
There is a similar company name already. Can I have what I want ? |
| A. |
When registering a limited company with Companies House in the UK, they are only concerned whether it is exactly the same name as an existing company (after the removal of some words like company, and, the etc. This means that THE WIDGETS COMPANY LIMITED would be the same as WIDGETS LIMITED and so Companies House would reject. However JAMES WIDGETS AND SONS is a different name to WIDGETS LIMITED and so would be accepted. If you were in the same industry as Widgets Limited, they would not take kindly to a competitor with a similar name and may issue court proceedings against you. How close something can be before being classed as passing off yourself as your competitor is a moot point but with Solicitors costing a minimum of £150+VAT per hour, if you can avoid an issue it is best to.
It is advised that you do some research into your proposed name. Check out the phone book, the trade magazines etc and decide whether you are going to trade locally or nationally. [ Top of page ]
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| Q. |
How much does it cost |
| A. |
The simple answer is £34.99 (£41.11 inc VAT). This is the cost of our Bronze package which will allow you to form your company electronically and receive the Memorandum and Articles of Association and the Company Incorporation certificate by email for you to be able to print out at your leisure. This price includes the required £20 Companies House administration fee and so we are only charging 19.99 for our submission and administration service. We believe you cant buy cheaper. The Incorporation certificate needs to be printed on 160 gsm Ivory coloured card. This card is available from most good office supply stores, but we offer the service of printing the certificate, as part of the Bronze package for only £3.99+VAT extra. [ Top of page ]
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| Q. |
What information do I need |
| A. |
Firstly you need a registered office. Whilst the title sounds grand, all it means is a postal address where Companies House can deliver paperwork and know that you will get them. You cannot use a PO Box service for this. For most home run companies, the registered office is their home address and for most other businesses its their main trading address. We can supply an address for this purpose, if, for example you are in rented accomodation or will be moving shortly.
Next, you need to decide on the people in your company. You have to have at least one "director" and at least one "secretary" (not a typist kind of secretary). They have to be two different people so you cannot form a limited Company with just one person. You only need to have one secretary. This person is required to ensure that meetings, such as the Annual General Meeting are minuted and that all Companies House submissions like changes of director are in place. You can have as many directors as you want. The company is "owned" by its shareholders (also called Members). The directors or secretary can be shareholders, or they can be other people not involved in running the company. Directors, shareholders and the secretary can in fact be other companies. "Fred Smithson and Partner Ltd" could be a director of "Fred, Jim & Jane Limited". In this instance, a nominated person of that company is required to give their details as part of the submission although their own personal details will not be on public record anywhere. The company that you are forming cannot be its own director or secretary though (Fred Smithson Limited cannot be a director of Fred Smithson Limited).
Now you have decided who is going to be involved in the company you need to collect 3 pieces of personal information from them. This acts a little like a "digital signature". It's similar to when your online banking service ask for letters 1, 3 and 7 of your password. It proves later that Companies House are speaking to the right person. The 3 questions are to know the persons TOWN of birth (i.e Coventry), the persons EYE COLOUR (i.e. Brown) and the persons MOTHERS MAIDEN NAME (i.e Smith). A maiden name is the family name. In many cultures, the family name (surname) changes to the husbands family name when a marriage takes place. Companies House need to know the family name that the persons mother was born with.
With this information, along with the people's name, address, occupation, date of birth and details, if relevant, of other UK companies that they may already be a director of, you can then create your forms and submit them quickly and simply.
[ Top of page ]
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| Q. |
Why is The Company Merchant better than other systems |
| A. |
Many formation agents still perform the time consuming process of paper based formations. Even those that use internet sites often have a company already formed in another name with other directors in place and they file paper based documents to Companies House to change the company name and directors etc. This causes 2 problems. Firstly, your company usually starts life with a name different to what you want and that old name will be on file for 20 years. Secondly, it requires filing of extra forms to change the director(s), secretary and shareholders which takes time (and transferring shares also incurs stamp duty). We take the Direct approach. Electronic links between us and Companies House mean that we submit your company registration straight into the Companies House process queue. This not only saves postage time but also means that as its in computer format already, it often only takes about 5 working hours to form the company - with YOUR company name, YOUR shareholder details and YOUR director and secretary details. No paper based forms need to be filled in. What could be simpler ? [ Top of page ]
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| Q. |
Can I form the Company with just one person |
| A. |
In order to form a UK Limited Company, you need TWO people to be involved (although you can have just one person owning the company). At least one person needs to be a director of the company and only one person needs to be the Company Secretary. The Comapny Secretary is responsible for ensuring that any documents required by Companies House are received on time (such as if a director resigns or a new one is appointed). The secretary can also take on a director role as well, as long as there is at least one other director to fulfil the minimum requirement of 2 people. Either (or both) of these people can be a shareholder in the company (i.e. own a stake in the company) or you could have a different person as a shareholder who is not a director or secretary. [ Top of page ]
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| Q. |
Who can be a director or secretary |
| A. |
You cannot be a director if you are an undischarged bankrupt (except with leave of the court), or if you have been disqualified by a court from acting as a company director (unless you have been given leave by the court to undertake certain functions for the company). It is up to the directors to ensure that a person with appropriate knowledge and experience to act as a secretary of the company is chosen. Many people choose their husband/wife, a brother/sister or a parent if running what is essentially a one person business. This is not a problem as long as the person agrees to provide the services for the company. [ Top of page ]
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| Q. |
What is a Limited Company |
| A. |
Not all businesses are companies. The reasons for having a company can be complex, but often they revolve around the need to limit the shareholders liability in case of problems, or because current tax incentives make it worthwhile financially. A limited company is a separate legal entity (i.e. like creating another "person"). It can make decisions and has its own assets (i.e. it can own property) and liabilities (i.e. it can owe money). It is created by registering details with Companies House. The company is owned by its shareholders (called subscribers or members) and run by the directors (these can be the same people).
If a director should resign or die, whilst it may affect the company's ability to carry on what it is doing due to lack of knowledge it doesnt affect its legal status. The primary reason for setting up a limited liability company is to protect your own personal money and property etc should the company fail to perform profitably - if you are just trading under your own name and do not have the legal standing of a limited company, your own personal assets, such as your house or car can be taken if , for example a case comes to court and you are sued. Because a limited company is a seperate "person", it doesnt own your property.
[ Top of page ]
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| Q. |
Can I choose any company name I want |
| A. |
It is important to check that the name you want is both available and within the rules that Companies House lay down.
The restrictions are that:
- you cannot register the same name as another company;
- the use of certain words like GROUP, HOLDINGS, INTERNATIONAL, MEDICAL etc is restricted; and
- names likely to cause offence are not allowed.
When deciding on accepting a company name, Companies House ignore all punctuation characters - spaces, fullstops, commas etc, they also ignore words like Co and Company along with words like the and and and they treat numeric words like five and 5 as the same.
This means that THE WIDGET COMPANY LIMITED has the same company name as WIDGET LIMITED and would therefore be rejected.
.THE.WIDGET.9.TO.5.COMPANY is the same as WIDGET NINE TO 5 LIMITED
You may also have issues if your name is very similar to an existing company on the register. If the name you want is very like an existing name, you may still be allowed to register it but an objection could be made following the incorporation of your company and you could be directed by the Secretary of State to change the company's name or have action taken against you by the owner of the other business for you passing your company off as them.
Certain words and phrases are classed as sensitive by the Department of Trade and Industry. If this is the case you will either be prohibited from using them or you might have to justify using supporting documentation that you are entitled to use it. E.g, to use the word Group, you must explain that you intend to have a controlling share of at least 2 other companies with 3 months of the formation of the holding company. For more information on this subject see Companies House notes CHN2, CHN3 & CHN11
Click here to check for a company name (Mon-Sat 7am to Midnight)
[ Top of page ]
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| Q. |
I want to trade under a different name to my limited company name. |
| A. |
It is advisable to consult a solicitor before using a business name. You should also check local phone books and any relevant trade journals or magazines to see if any other business is already using the name. If it is, you could face legal difficulties.
If you have any intention to trade goods or services you would be well advised to ensure your business name does not conflict with a registered trademark. It does not have to be identical with a trademark to cause a potential conflict. Problems can arise if a name is judged to be confusingly similar.
A few years ago there used to be a register of business names that could be checked against if you wanted to trade under a different name. Now, the only register is the register of Companies held by Companies House [ Top of page ]
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| Q. |
I want to use the word GROUP in my company name. |
| A. |
Yes you can, however GROUP is what Companies House call a sensitive word. Ths means that they require extra information in support of your formation request. With the word GROUP, you have to specify that the company you are forming now will have shares in at least TWO other companies within 3 months of its formation. You have to specify what the names of the other companies will be, or, if they are already formed, advise the name and the company registration number, and also advise what percentage of shares will be issued to the group company. [ Top of page ]
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| Q. |
I want to use the word INTERNATIONAL in my company name. |
| A. |
Yes you can, however INTERNATIONAL is what Companies House call a sensitive word. Ths means that they require extra information in support of your formation request. With the word INTERNATIONAL, you have to specify that the company you are forming now will have trading relations with other countries within three months of its formations. You also have to specify what those countries will be. Your supporting documentation is available for public viewing. [ Top of page ]
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| Q. |
What are the authorised shares |
| A. |
This is the number of shares you initially authorise your company to issue to shareholders. Usually a share authorisation of either 100 or 1000 shares with each share valued at £1 is used.
It is worth noting that although you may authorise 1000 shares, if only 1 share is issued to one person, that person becomes 100% shareholder in the company. Having 1000 authorised shares enables you to increase your share ownership later if you want more shareholders to enter the company.
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| Q. |
What is a registered office |
| A. |
The registered office is an address in England or Wales (or Scotland if your company is registered there) where documents can be delivered to the company.
Companies House use the Post Office address file to verify registered office addresses; so, in order to provide a quick incorporation, you should check to ensure all postcodes are valid and correct for the address being used. You cannot use a PO Box service for a registered office (although you can trade using a PO Box address).
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| Q. |
Can I change my registered office address easily |
| A. |
If a company changes its registered office address the new address must be notified to Companies House on Form 287.
This can be done online using our website free of charge, as often as you need to.
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| Q. |
What are Memorandum and Articles of Association and do I need them |
| A. |
Memorandum and Articles are two seperate documents which sets out details of the company. The Memorandum of Association shows the Company name, whether the registered office is situated in England/Wales or Scotland and what it will "do". This may simply be "to carry out the business required of a commercial organisation". We have a standard Memorandum of Association which covers the basis of most normally trading limited companies. If you are in any doubt, please pass our standard Memorandum to your accountant to verify.
Articles of Association describes the rules for running the company. Again, we provide a standard document which covers most Limited Companies but if you have any doubts, please pass our standard Articles to your accountant to verify. Once your company is set up you can pass resolutions to change your Memorandum or Articles of Association. Remember that Companies House need a copy of any replacement documents. We send a copy of your initial documents to Companies House at the point of formation
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| Q. |
What if Companies House reject my application |
| A. |
If Companies House reject your application our system will automatically email you informing you of this. You can then log back into our system and make the necessary modification to your application and resubmit your forms back to Companies House (free of charge).
If you decide not to continue with the application you must then log into our system and cancel the application. Any costs associated with that application are placed on your online account to use for any other services. If you wish to have them refunded to your card please contact us.
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| Q. |
Is there any other information that may help me |
| A. |
Yes. Companies House have their own Frequently Asked
Questions list.. Click
here for their FAQ which has links to many other resources. [ Top of page ]
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| Q. |
Do I need to keep any registers |
| A. |
The directors and secretary should ensure that registers of
the company members (shareholders) its debenture holders (if any)
the directors and secretaries the directors interests and shares of the company or any related company any mortgages and charges over company property
are properly kept and that they are available for inspection by anyone who wishes to see them. We supply a range of Company Registers - either softback, hardback or looseleaf, available for purchase with your formation, or afterwards. From as little as £14.99+VAT, including 12 blank share certificates, they offer excellent value for money. [ Top of page ]
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| Q. |
When do I need to tell Companies House about changes |
| A. |
The directors and secretary are responsible in law for ensuring that changes to the company structure and management are notified promptly to Companies House. Failure to do so is an offence.
The notifiable changes include
Any new allotted shares, on Form 88(2) within 28 days changes amongst directors and secretaries - Forms 288a, 288b and 288c, within 14 days
special, extraordinary, elective and certain other resolutions within 15 days
charges over company assets - within 21 days [ Top of page ]
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| Q. |
I formed my company with a mis-spelt word. Can I change it |
| A. |
Whether you mis-spelt your company name when you formed it, or whether you formed one company but have decided that you want a different name now, the name can be changed.
The company must pass a written resolution, signed by all members, to effect a change of name request. A form NC20 is filed with Companies House, advising them of the change of name. Companies House will then issue you with a new certificate of incorporation. Companies House make a charge for this service. The charge is currently £10, made payable to Companies House. The Form NC20 is available for download from here [ Top of page ]
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| Q. |
I've seen a company trading that is very similar to my name |
| A. |
If you wish to object to a name, for example, because it is similar to yours and may lead to confusion between companies, you should write to:
(for England and Wales)
The Secretary of State for Trade and Industry
Companies Administration Branch
Companies House
Crown Way
Cardiff
CF14 3UZ
(For Scotland)
The Secretary of State for Trade and Industry
Companies House
37 Castle Terrace
Edinburgh
EH1 2EB [ Top of page ]
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| Q. |
On which documents must my company name be shown |
| A. |
The company must state its name, in legible lettering, on the following:
- all the company's business letters;
- all its notices and other official publications;
- all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by, or on behalf of, the company; [ Top of page ]
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| Q. |
Does The Company Merchant provide share transfer forms |
| A. |
Companies formed using The Company Merchant are formed with the correct share holders from incorporation, so there is no need for initial share transfer forms. Importantly, this also means there is no need to pay stamp duty on the transfer of any shares either. However, we do have a share transfer forms package available at £9.99 (£11.74 incl VAT) which provides 4 share transfer forms should you need to transfer shares later on [ Top of page ]
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| Q. |
How do I issue more shares |
| A. |
If you wish to issue further shares up to the authorised share capital, form 88(2) should be completed and sent to the Registrar of Companies.
You can increase your authorised share capital by passing an ordinary resolution at a general meeting. A copy of the resolution and Form 123 detailing the proposed increase must then reach Companies House within 15 days of being passed.
On a similar note, the authorised share capital of a company can be reduced using Form 122 and must reach Companies House within 1 month.
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| Q. |
Where can I obtain information on VAT |
| A. |
If you mainly trade with the public directly, then your prices will be higher if you are VAT registered as the public will need to pay the VAT and will not be able to claim it back. If you mainly trade with other VAT registered businesses then one company collects the money and the other company claims it back so there is
no cost overhead. We would advise speaking to your
accountant or business advisor to get the best source of VAT
information and also the VAT
information site.
You can download the VAT
Registration form print it and apply by post. Customs and Excise
publish a number of helpful information pages.
Top
10 Tips
What
is Value Added Tax ?
What
do you Charge VAT on?
Detailed
information on registration
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| Q. |
Where can I obtain information on the Inland Revenue |
| A. |
The Inland Revenue Site is the best place to start, along with speaking with your accountant or business advisor
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| Q. |
How do I get a PO Box Address and should I use one |
| A. |
The Post Office website at www.royalmail.com has a lot of information for new businesses and what postal services are available. Please remember that Companies House will not accept a PO Box as a registered office address, but you may still choose to have a PO Box as a trading address to allow you to more easily relocate within the same postal area without affecting your business.
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| Q. |
What is a shareholders agreement and do I need one |
| A. |
A Shareholders
Agreement contains the rules by which the ownership of a Company is held and
it -
sets out the limits and procedures for how the Company is to
be operated
confirms the powers of the shareholders in the Company
provides a basis for the resolution of disputes
prevents the situation where changes in one shareholder’s personal
circumstances can have an effect on the Company or other shareholders within
the Company
The Agreement is there to ensure that
decisions are taken by consensus and discussion rather than unilateral imposition.Â
It will provide clarity and certainty as to what can or cannot be done, resulting
in a reduction of the areas in which there might be conflict.
Why Have a Shareholders Agreement?
By having an
Agreement the situation where changes in one shareholder’s personal circumstances
can have an effect on the Company or other shareholders within the Company
is prevented.
It also provides
a level of protection for all of the parties involved in the ownership of
the Company against the actions of the others.
Typically Shareholders
rely on commonsense and tolerance of others to resolve matters; they may well
be family members or long-term friends. In either situation anything that
can be done to reduce the possibility of conflict is a good thing.Â
It is common
for a newly formed Company to be run in the initial stages more like a Partnership.
This however is not a suitable basis on which to continue operation as it
grows and matures; there is a need for structure and a Shareholder Agreement
is one of the cornerstones of the Company.
While there is
a lot to consider when starting a new Company, it is prudent to take a longer-term
view for the future. The formation of a Company using this website is relatively simple
to achieve and allows one to start trading, it does not however confirm what
responsibilities and more particularly the limits of responsibilities of the
shareholders (owners) are.
However, for
these four questions below a Shareholders Agreement will remove and resolve
potentially damaging issues -
What happens
if shareholders fall out?
Commonsense and
tolerance may not be enough to end a dispute and specific agreed actions are
called for. An Agreement will force an end to a dispute, by providing a structure
within which the parties have to abide, in the event of a stalemate situation
being reached, then a Shareholders Agreement will
provide a dissolution procedure to allow the parties to go their own ways.
What happens
if a majority Shareholder dies or is divorced?
The spouse of
the Shareholder may take his/her place. Is this what the other Shareholders
want? An Agreement will provide a mechanism by which the other Shareholders
have first right of refusal to purchase the deceased’s shares. In the case of
a shareholder getting divorced, would they wish to be joined for board meetings
by a former spouse who may well be hostile? An Agreement can prevent this.
Can you sell
your shares to anyone?
Without an Agreement
you may – this may not be in the best interests of the Company. A common provision
is a right of first refusal. This means that if a shareholder obtains a commitment
from an outsider to purchase shares, the shares have to be offered under the
same terms to the existing shareholders for a specified period. If the other
shareholders do not want shares to go to the outsider, they merely have to
match the price and purchase. This will ensure
that the on-going shareholders cannot have an un-welcome partner foisted upon
them, to their detriment.
Are there
any financial limits set?
Without a formal
Shareholder Agreement, it is possible for your fellow shareholders to agree
a contract on behalf of the Company no matter what the terms. With an Agreement
in place this cannot happen or it will not be binding on the Company as the
person in question will have exceeded their responsibilities. Having control
on an individual’s ability to acquire commitments on behalf of a Company is
of paramount importance, to ensure the smooth and profitable running of the
Company.
A Shareholder Agreement, as a legally binding document, has to be written by a solicitor. We are not solicitors, however a telephone call to several solicitors will find that £500+VAT is likely to be the lowest price you can find. With our partner companies, we can refer you to a service where the agreement that will help to protect your business can be supplied for £400+VAT. This lower price does not reflect a lower service or shorter agreement but as we form hundreds of companies every month, we are in a position to achieve preferential pricing for the service which is then passed on to you. This agreement may provide you with the protection you need should issues arise between shareholders in the future when the company does not just employ yourself and your business partner, but employs a number of people, where a shareholder dispute may result in disharmony in the boardroom.
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| Q. |
What period should the accounts cover |
| A. |
The accounts should start from the day of incorporation (not from the date the company actually starts doing business). The financial year ends on the company's accounting reference date, or, if the company wishes, on a date up to seven days either side of the accounting reference date. A particular financial year can be less or more than 12 months but it cannot be more than 18 months [ Top of page ]
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| Q. |
Do my company accounts need to be audited |
| A. |
Companies with a turnover of no more than £1 million and a balance sheet total of no more than £1.4 million may dispense with an audit altogether. A company which is a member of a group may also claim exemption if the group turnover and balance sheet total do not exceed £1 million net (£1.2 million gross) and £1.4 million net (£1.68 million gross) respectively. Slightly different rules apply to companies which are charities. The basis for claiming exemption will need to be stated on the balance sheet and signed by a director [ Top of page ]
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| Q. |
What if I am late delivering my accounts to Companies House |
| A. |
If accounts are delivered late to Companies House, there is an automatic penalty in the range of £100 to £1000 for a private company and £500 to £5000 for a public company.
Also, the directors are personally responsible for the delivery of the accounts to Companies House. They are liable to prosecution in the Magistrates Court (the Sheriff Court in Scotland) if the accounts are delivered late or not at all and a conviction would mean a criminal record. [ Top of page ]
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| Q. |
What is my accounting reference date |
| A. |
The accounting reference date is the date in each year to which accounts will be drawn up. The date depends on the date of incorporation as it is the last day of the month in which the anniversary of incorporation falls. For example, if your company is incorporated on 14 June this year, the accounting reference date will be 30 June, and its first financial year must end on 30 June next year (or within seven days of that date).
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| Q. |
Can I change my accounting reference date |
| A. |
You may change it by sending Form 225 (available for download from this website under the Companies House menu option) to the Registrar. You must do this during the accounting period affected by the change or during the period allowed for delivering the associated accounts.
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| Q. |
What if I no longer need my company |
| A. |
Private companies that have not traded or otherwise carried on business for at least three months may apply to the Registrar to be struck off the register. Even if you only formed your company last week, you need to wait three months before you can file for the company to be struck off the register.
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