A limited company is a private company whose owners are legally responsible for its debts - only to the extent of the amount of capital they invested.
As a director of a limited company, you must:
- Follow the company’s rules, shown in its articles of association
- Keep company records and report changes
- File your company accounts with Companies House and your Company Tax Return with HMRC
- Tell other shareholders if you might personally benefit from a transaction the company makes
- Pay Corporation Tax
- Register for Self-Assessment and send a personal Self-Assessment tax return every year
You don’t need to register for Self-Assessment or send a tax return if your company is a non-profit organisation (for example, a charity) and you didn’t get any pay or benefits, like a company car.
You can hire other people to manage some of these things day-to-day (for example, an accountant) but you’re still legally responsible for your company’s records, accounts and performance.
Records about the company
You must keep accounting records that include:
- All money received and spent by the company
- Details of assets owned by the company
- Debts the company owes or is owed
- Stock the company owns at the end of the financial year
- The stocktakings you used to work out the stock figure
- All goods bought and sold
- Who you bought and sold them to and from (unless you run a retail business)
You must also keep any other financial records, information and calculations you need to prepare and file your annual accounts and Company Tax Return. This includes records of:
- All money spent by the company, for example receipts, petty cash books, orders and delivery notes
- All money received by the company, for example invoices, contracts, sales books and till rolls
- Any other relevant documents, for example bank statements and correspondence
You can be fined £3,000 by HMRC or disqualified as a company director if you don’t keep accounting records.
You must also keep details of:
- Directors, shareholders and company secretaries
- The results of any shareholder votes and resolutions
- Promises for the company to repay loans at a specific date in the future (‘debentures’) and who they must be paid back to
- Promises the company makes for payments if something goes wrong and it’s the company’s fault (‘indemnities’)
- Transactions when someone buys shares in the company
- Loans or mortgages secured against the company’s assets
How long to keep records
You must keep records for 6 years from the end of the last company financial year they relate to.
KLAS Ltd can help with all areas relating to Ltd company accounts. Please call to discuss with one of our accountants with no obligation on 0151 556 1221
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