Register with Companies House
Companies House has the details of all companies trading in the UK. This includes details of directors and shareholders, as well as financial information (accounts). Incorporation involves filing the relevant form, together with a small fee, with the Registrar of Companies. The snag is that the form needs to have the signature of a witness that is deemed "official". This boils down to needing a lawyer to watch you put pen to paper. Instead of the hassle and expense of doing this, you can either buy a ready-made company from one of the many firms offering them, or use an electronic incorporation service. In the latter, the service acts as the witness, and files your incorporation forms for you. The fee over and above Companies House's own can be as little as £5, and it's worth shopping around. The list of companies offering electronic incorporation services is on Companies House's web site. Note that all such firms will try to sell you all sorts of other services (e.g. doing your accounts for you, running your web site). You only need them to submit your Form 10 and Form 12 to Companies House, and send you back electronic versions of your company documents.
Companies House has a vast amount of guidance on the intricacies of incorporating, and running, a company. Take the time to read it, particularly the Guidance on Company Formation.
Register for Electronic Filing
Whenever you need to change the address of any director or the company secretary, or file the annual return, Companies House allows you to do this electronically using their WebFiling service. You can also opt for their PROOF scheme, in order that they will only accept documents electronically rather than also by post. This has the advantage that it is much faster, and also more secure, as it prevents random people sending in false changes of address for your company. Registration for WebFiling necessitates asking Companies House to send you an activation code through the post, whilst PROOF also requires you to send them a paper form.
Register as an Employer
Company directors are required to fill in an Employment page in their self-assessment tax returns for each company they are director of. HMRC tell me that this applies even if the director did not actually earn anything, which implies that as soon as a company incorporates, it has employees in the form of its directors. (Note that this conflicts with the idea expressed in the "When You Need to Register" (as an employer) section of HMRC's guidance, which implies that if employees are not paid very much, registration is not necessary).
In order to be an employer, the company must register as such with HMRC, and can use their Send New Employer Details by E-mail tool (provided that the company has fewer than 9 directors, and does not operate a "simplified" PAYE scheme with more than 10 employees. If so, register by telephone).
Within a few days, your accounts office reference and PAYE (Pay As You Earn) reference numbers will come by post. These are needed when filling in PAYE forms, and by your directors for their tax returns.
Register for PAYE Online Services
Having obtained your PAYE reference, you can now register for using HMRC's PAYE online tools. These make life easy as regards keeping track of employee data, and submitting forms (e.g. when you take someone on, or submitting P14s at the end of the tax year).
Registration for online PAYE services requires you to create a Government Gateway ID and password, which is sent to you in the post, along with an activation code. You'll then be able to tell HMRC that you're employing your directors.
Inform HMRC that PAY/NICs Contributions will be Nil
If you will not be paying your directors anything (in cash or any other benefit), you are unlikely to owe HMRC income tax or Class I NICs (National Insurance Contributions). Normally, such payments to HMRC are made monthly, or quarterly for small businesses. However, you can inform HMRC that your returns will be "nil returns" for the foreseeable future, which will remove the requirement on you to keep sending these in. For the telephone number for this, see the No PAYE/NICs Payment Due page. You can also use the form on that page to send in nil returns for any months/quarters where you do not owe any PAYE/NICs, but have not notified HMRC that you will be making nil returns for an extended period of time.
Take Out Employers' Liability Insurance
If you are intending to pay your employees anything at all, you are almost certain to be legally required to take out employers' liability insurance. Take a look at my post Do You Need Employers' Liability Insurance? for more information on this.
Register for Corporation Tax Online
Soon after your first year of trading you'll receive a Corporation Tax return in the post from HMRC. You can also file this online (which makes life easy, as the paper form covers many cases which are unlikely to apply to you), but have to register to do so. You can only do this when you receive your UTR (Universal Tax Reference) number, and hence probably won't be able to do so at the time you register for PAYE online. Oh well... See Corporation Tax online registration (fortunately, you can use the same Government Gateway ID as for PAYE online).
Conclusions
If you've managed all of the above, congratulations! All you now have to do is survive your first annual return from Companies House (where you detail who the shareholders are), and file your accounts with them (which also need to be filed with HMRC).
If all of this fills you with fear, an accountant will be able to help, but of course they'll charge you money. If you're a start-up in Cambridge who needs someone on board to help navigate through the waters of legal and financial bureaucracy, I'm job hunting!
Do leave any questions/comments and I'll try to address them in a future post.
Posts
