| COMPANY FORMATION: YOUR OPTIONS EXPLAINED | |
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| FINANCIAL LIMITED | |
| THE COMPLETE BUSINESS MANAGEMENT SERVICE | |
| CONTENTS | |
| THE LIMITED COMPANY | |
| Off the Shelf | |
| A stock of the shelf company will be held by the agent, accountant or solicitor already set up with its own name, company number, share structure and certificate of non-trading. These companies can be purchased at a moment’s notice and then tailored if necessary, at extra cost, to your own specification, including change of name. The cost will vary from £85 to £400 depending upon the extent to which professional assistance is used. | |
| Own Named Company | |
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Subject to the availability of your chosen name at Companies House, a company can be created to your own requirements within about two weeks. The cost will vary from approximately £150 to £400 depending upon the extent to which professional assistance is used.
The contractor should always ensure that he understands the services, which are being provided at the company formation stage. Beware of "free Limited Company" offers which often leave contractors to "sink or swim" with the associated paperwork once the company has been supplied. |
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| DOCUMENTATION RECEIVED | |
| Certificate of Incorporation | |
| As indicated by its name, this is a certificate of the fact that the company was incorporated, where and when it was incorporated, and its registered number. It may be necessary for you to supply copies of the certificate to your bank manager etc. as proof of the company’s identification. | |
| Memorandum and Articles of Association | |
| You will normally receive several copies of this, which is in fact the constitution of the company. This will set out the objects for which the company is formed, its powers on conducting its day to day business, and will indicate the capitalization of the company and the original subscribers to the company. Copies of the Memorandum and Articles are normally given to the company’s bankers, the Inland Revenue, the accountants, and may be requested by any other individual who intends to invest in or finance the company, or rent premises to the company. It is advisable to have spare copies on hand at all times. | |
| Statutory Books | |
| These normally comprise various registers to be maintained recording the statutory affairs of the company, e.g. registers of shareholders, directors etc. and minutes of all meetings of the shareholders of the company. The statutory books are normally kept at the Registered Office of the company but, in certain circumstances, may be kept elsewhere. Despite generally being referred to as the "statutory books" the registers can normally be contained within one hard backed book or register. | |
| Statutory Compliance Forms | |
| Appointment of Director and Secretary (FORM 288A) | |
| Each company is obliged by law to appoint two separate individuals to the statutory posts of director and secretary. In contracting companies the director will normally be the contractor himself. The secretary will normally be the spouse or other close friend or relative of the contractor. The secretary may be required to sign several statutory or tax returns of the company, and therefore it is important that he should be someone either of a professional capacity or other close fiduciary relationship. | |
| Resignation of Director or Secretary (FORM 288B) | |
| Usually completed at the off the shelf company formation stage. This form notifies Companies House of the resignation of the subscriber Director and Secretary upon appointment of the contractor and second individual as new Director and Secretary. | |
| Notification of Registered Office (FORM 287) | |
| The company is required to notify a registered office of the company. This will be the statutory address of the company and may be different from the trading address of the company. All formal statutory correspondence and some tax correspondence will be addressed to the registered office of the company. The registered office will normally be the home address of the contractor (if he has a permanent address) or may be the office of the company’s accountants or lawyers. It is worthwhile noting that the registered office of a company must be within the country of registration, and for this purpose Scotland, Ireland and England and Wales, are separate countries. | |
| Issue of Shares (FORM 88-2) | |
| A Company is usually set up with two ordinary shares in issue. Normally the original two shares will be held by the registration agents, and transfer forms (J30) in respect of these will be received on acquisition of the company. These shares will then be transferred to the director or other persons. In some circumstances it is adequate to leave the company with two issued shares, but in other circumstances it will be advantageous to issue further shares in the company. It is very important that this be discussed at the outset with your chosen adviser. | |
| Notification of Accounting Reference Date (FORM 224) | |
| The company must notify the registrar of the date of which it intends to draw up its financial statements. In most circumstances this will be a month end closest to one year after commencement of the contract. However, in some circumstances the contractor may wish to nominate an accounting date for other reasons, such as maximising the period before which Corporation Tax becomes payable by the company for the first time. You are allowed nine months from the date of incorporation to choose an accounting reference date. Accounts must then be submitted for that chosen period within 22 months of the incorporation date. Each successive set of accounts will then be made up for one year periods ending on the chosen accounting reference date. | |