Setting up a limited company: Filing requirements you need to know about
Avoid unnecessary fines by knowing your post-formation filing obligations now
You’re setting up a business and there is plenty to think about. What name should you choose? What is your marketing plan? Are you trading right away or planning on starting at a later date? Are you going to get funding?
All good concerns, but what about your post-formation filing obligations? Chances are they aren’t the highest on your list of issues, but they certainly are important to know about. So here we will discuss post-filing obligations for your limited company.
Your filing obligations essentially break down into three categories – annual returns, annual accounts and tax returns.
Annual returns are now known as ‘confirmation statements’: find out more about the change to annual returns here.
The first thing to think about is your annual return, with the first annual return due no later than one year and 28 days after the company’s incorporation date. The key thing to remember is that this does not include any financial information – it’s an annual submission to Companies House that illustrates various information and details of your company.
But what does this include exactly?
- Basic information – This is information such as the full company name, registration number, standard industrial classification (or ‘SIC’) code (a code that outlines the company’s industry) and the registered office address.
- Officer information – Director, shareholder and secretary (if you’ve chosen to appoint a secretary) information such as name, date of birth, occupation, service address and residential address (for the director, just name and address for the shareholder).
- Share information – How many shares the shareholders hold.
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Another consideration when it comes to post-filing obligations is your annual accounts. They are, as they sound, details of your company’s accounts. This is essentially financial information filed with Companies House on an annual basis.
If you classify as a small business (i.e. your turnover is less than £6.5m, you have less than £3.26m in reserves and you employ less than 50 people) your returns are simpler. If you’re an owner operator filing accounts yourself it’s probable that you qualify as a small business.
So what is included?
- Balance sheet – You must include your balance sheet within your annual accounts. This is basically an abbreviated form of your full accounts that are then sent to Companies House. You still need to prepare full accounts, but this is for the tax return filed with HMRC and not the annual accounts.
- Profit & loss – This is essentially details on your company sales, as well as the costs associated with running the company, which shows the profit or loss that your company has made in the past year.
- Director report – This is a detailed report on the general state of the company used as an assessment of the company and how it is complying with financial or accounting standards. These are included for transparency on corporate governance.
You can file online with Companies House, along with your annual return, or alternatively you can use a filing service.
It’s possible that your company is dormant, perhaps if you have traded for a while and then stopped – or if you’ve just reserved a company name to start trading later. If so, you need to file dormant company accounts as opposed to ‘normal’ ones.
What happens if you don’t file? Well, aside from the fact that it’s bad business practice – there are fines.
Depending on how late you file, the following penalties apply:
- Less than one month late – £150 for a private company and £750 for a public company.
- Between one and three months late – £375 for a private company and £1,500 for a public company.
- Between three and six months late – £750 for a private company and £3,000 for a public company.
- Over six months late – £1,500 for a private company and £7,500 for a public company.
Fines are significant, and completely avoidable, so it’s essential to file on time.
Company tax returns
Tax returns are a little bit different to the above in the sense that they are filed directly with HMRC as opposed to Companies House. You can see more detail on how exactly to file your company accounts and tax returns by looking at the official guidelines here but key points to remember about company tax returns include:
- Statutory accounts – These are essentially the same as included in your annual accounts. If you are filing your company tax return and your annual accounts at the same time you might be able to file jointly. You may need to include further accounts if they are required by your unincorporated association’s rules.
- Detailed information – The details included in your company tax return are a lot more detailed. They include, where relevant, details on, and money owed to, your business, a summary of profit from selling any assets and details of any kind of tax relief or allowance.
- Filing software – If you’re a small company you probably won’t need any kind of professional software. You can file online yourself or use a filing service. However, if your turnover is more than £6.5m or you have miscellaneous income and several other details to report you will need to use dedicated filing software.
To file a company tax return you can get an accountant (you can find an accountant here) to file on your behalf – or you can use the online filing option. Deadlines for your tax return are longer than your annual returns and annual accounts – they are due 12 months after the end of the accounting period it covers.
Penalties can be quite stringent. If you are one day late filing it is £100 and after three months you may receive an additional £100 fine. After six months HMRC will add a 10% penalty to corporation tax bill – which can be quite substantial. Additionally, if you are six months late you will get a further 10% penalty.
How do I file and what happens if I don’t?
You need an online Government Gateway user ID and password if you’re filing online. You can register online for many other government and tax related obligations, including VAT returns or PAYE. If you appoint an agent they can file on your behalf without registering.
You can file yourself online or you can use filing services to make it easier. You need to file all of the above mentioned (annual accounts, annual returns and company tax return) when you are trading as a limited company. If you’re self-employed or a sole-trader you still need to submit a tax return, but it’s a self-assessment return in this case so it’s slightly different. See the official guidelines for more information on self assessment tax returns.
If you don’t file, you get a fine. That’s the chief drawback, but it’s also possible that you will be struck off the company register. So the consequences of not filing are really quite substantial.
There are many company formation agents in the UK offering different packages and slightly different services. We’ve chosen to partner with Company Formation MadeSimple, an approved e-filing partner of Companies House because they have successfully registered over 300,000 UK companies and we are impressed with their service, speed and value for money.