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Frequently Asked Questions
Below is a list of our frequently asked questions, if you have a query that is not listed here please drop us an email and we will be happy to look into it for you.
About the Company Wizard
   
 

What are the advantages of using the Company Wizard?
The Company Wizard is an online resource that will empower you with the knowledge to carry out the Incorporation of your company without the need to hire a formation agent or solicitor, which in some cases will charge up to £200 for their services. We provide a step by step guide to incorporating your own company with the use of custom templates. These templates include both the Memorandum and Articles of Association that the majority of formation agents use, we also provide all the relevant forms with comprehensive instructions on how to complete them. The only cost you will incur is £19.99 for the Template Pack.

  How long will it take to incorporate my company?
You will usually receive a certificate of incorporation from Companies House within 7 days of submitting your documents.
  How many people are required to set up a limited company?
In order to set up a limited company you need at least one director and one secretary. The director is responsible for the affairs of the company and it's compliance with the clauses set out in the Articles of Association. The secretary is responsible for the general administration of the company and must ensure that the accounts are returned on time and in the correct nomination.
   
The Company Name
   
  How do I check the viability of my company name?
Your proposed name must be original in the sense that is not currently in use. The Companies House have an online register of all the companies in the UK You can access their search facility free of charge between certain times. If you are using any of the listed sensitive words you must also show supporting evidence to confirm that the word is appropriate for the nature of your business.
   
Shares
   
  How do I work out the division of shares?The purpose of shares is two fold, they provide a means of putting capital into your business and they also determine the level of control you have over its operations through voting power. Deciding upon the division of shares is of vital importance in establishing the powers you have within the company, you need over 50% in order to fully control the business. It is possible to create a high number of shares in your company but only assign a fraction of them. For example you may want to create a share capital of 1000 shares with a nominal value of £1, but only assign 100 to the shareholders; this is known as the Issued share capital. The percentage owned by a shareholder of the issued share capital determines there interest in the company. On the other hand if you would prefer a controlling interest in the company you may create 1000 shares but assign only 1 to yourself. You may then grant options over the remaining 999 shares at a later date.
  How are shares transferred to new investors?
The process of transferring shares to new investors is relatively simple. The current shareholder must complete the relevant section of the Stock Order Form and surrender the share certificates to the prospective shareholder. The shares will officially be in the name of the new member once the stock exchange transaction clearing takes place.
 

What details must be included on the companies share certificates?
You must include the following details on your share certificates:
> Your company name
> The type of share you are issuing
> The name and address of the shareholder
> The number of shares in words that are to be assigned to the shareholder
> The value of the share
> A signature from a director and secretary of the company
> An example of a share certificate can be seen here.

Click here for an example of a share certificate
   
Accounts and Company Records
   
  What kind of accounts and records must the company maintain?
All companies are required by law to keep a full record of income, expenditure, assets, and liabilities. These records must be kept safe as they will assist you in attending to your duty of returning the companies annual accounts.
  Do I need to return any documents annually?
Yes, you must provide a number of documents following your 'Accounting Reference Date' (ARD). This date is usually the last day of the month your company was incorporated and occurs each year; it is the date that your financial year ends where the accounts are to be made up to. You have 10 months from your ARD to return the following documentation to Companies House:

> A profit and loss account
> A balance sheet signed by the director
> An auditors report (This is only mandatory if your company has a turnover exceeding £1 million)
> A directors report signed by the companies director and secretary
> Notes to the accounts
> Group accounts (When necessary)

  What happens if I return my accounts late?
If you fail to submit your accounts to Companies House within the 10 month period following your ARD, you will incur the following penalties.

Length of Delay............................................Public Company ............Private Company

3 months or less .................................................£500.................................... £100
3 months 1 day - 6 months............................... £1000 ..................................£250
6 months 1 day - 12 months .............................£2000 ..................................£500
More than 12 months.......................................... £5000 ..................................£1000

Directors may also face prosecution for failure to deliver accounts on time.
  Are there any exceptions for failing to return your accounts on time?
Companies House are very strict on the annual return of company accounts, they will however consider extending your time under exceptional circumstances. Any request for more time must be supported with a letter detailing the precise reasons why you have failed to return the documents in the allotted time.
  What Details must I include in my companies stationary?
You must show the full company name, the address of the registered office, the place of registration (i.e. England and Wales) and the company's registered number.
   
Taxation
   
  How will I be taxed as a company?
The forms of tax you are liable to pay is very much dependant on your company's financial position. As a company you are automatically liable to pay Corporation Tax on your trading profits, capital gains and all other profits from external sources. The amount of corporation tax you are required to pay is calculated on the profits accumulated over the tax year (1st of April to the 31st of March). As a company you may also be liable to pay Value Added Tax (VAT), this is a duty levied on most goods and is calculated at 17.5% of the trading price. If your annual turnover exceeds £58,000 you must charge VAT on your goods and services, on the other hand you are also able to reclaim your VAT expenses at the close of the financial year. The other consideration you must make is how you will pay yourself, most companies work on the Pay as You Earn scheme (PAYE) this enable the company to pay its employees a salary that is subject to income tax deductions and National Insurance Contributions. If you have not done so already it is advised that you contact your local Inland Revenue office for an information pack on PAYE.
  What are the rates of corporation tax?
Since the 2004 Budget was announced on the 17th March 2004 the rate of Corporation Tax is a minimum of 19% on the distributed profits of small companies.
  How is income tax deducted?
Income tax is deducted on the salary you and the company's employees claim from the business. There are a number of key points to realise when dealing with income tax.

Everyone is entitled to earn a certain amount of money before they are taxed, this is known as their personal allowance.

An individual's tax allowance is dependant on their circumstances; there are different allowances for married couples, people with children and people who are registered blind.

The Inland Revenue issue everyone with a tax code this is made up of a letter and three numbers that classifies their tax status. It is always worth ensuring you have been assigned the correct tax code and always inform the Revenue of any changes to your circumstances.

As a company director you must ensure that the correct amount of income tax and national insurance is being deducted from all your employees' salaries. You must complete an annual tax return and pay the money into an account administered by the Revenue. Failure to deal with income tax in the necessary manner may result in hefty penalties.
  Do I have to register for VAT?
As a limited company you are legally obliged by HM Customs & Excise to pay VAT if the taxable annual turnover exceeds the current threshold of £58,000, or it is believed that it will exceed this limit in the next 30 days. Not all products and services are subject to VAT and in some cases different rates may apply.
> Rated 0%. Applies to most food products (excluding restaurants, cafes and hot take always), books ...newspapers, and young children's clothing.
> Rated 5%. Applies to fuel and power consumed by homes and charities.
> Rated 17.5%. Applies to most other goods and services
  How do I calculate the VAT I must charge on my products / services?
It is quite simple, VAT should ordinarily be added to the price of your goods. For example if you are selling a brand of Hi-fi for £200 before being VAT registered you must now add 17.5% of £200 (£35) to the total selling price thus increasing the retail value to £235. For every sale you make you must pay £35 to HM customs and Excise.
  How do I pay VAT and when?
VAT is usually paid every three months. A VAT return must be completed every quarter, calculating the amount of VAT due. HM Customs and Excise provide a VAT Return form called the VAT 100 this must be completed and signed with the appropriate payment.
 
 
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