All businesses are legally required to keep accurate accounting records so that the correct amount and type of tax is paid to HMRC. There are different forms that businesses can take with different accountancy requirements and liabilities.
Here is a quick overview of the most common types of companies:
This is an organisation that you can set up to run your business- it's responsible in its own right for everything it does and its finances are separate from your personal finances. A limited company needs to be registered at Companies House and must operate within the latest Companies Acts.
A Sole Trader is an organisation owned and run by one individual, where there is no legal distinction between the owner and the business.
Although the term 'Sole Trader' means you are responsible for the business, you can employ staff. Generally, you are allowed to keep all the profits after tax, but you are personally responsible for any losses made by the business.
Limited Liability Partnership (LLP)
This is a separate legal entity which confers full liability on its members. It is created by registration at Companies House and there must be a minimum of 2 members (there is no upper limit).
The partners in an LLP are not personally liable for debts which the business cannot afford to pay- their liability is limited to the amount of money they invest in the business.
All the profits can be shared between the partners and each partner pays tax on their share. The responsibilities and profit share for each partner are set out in an LLP agreement.
Are you a start-up business?
If you have not decided on which type of company is the best option for your circumstance, give us a call and we will advise you, so it will enable you to make the right choice. There is no charge for an initial consultation.
Not just an Accountant...
Our job does not stop at your accounts. We believe in becoming part of your team and helping you to succeed and grow your business in any way that we can help you. Sometimes that means you need services that we don't offer and we have a database of good reliable contacts in most areas of business that we are happy to pass on their details to you e.g. Marketing Services, IFA, Insurance Broker, Solicitor, Telecomms that can help you to grow your business.
You know what they say; Recommendation is the Strongest Form of Marketing.
How can Tidy Numbers help?
We have an extensive range of experience and we offer a range of services that can help you with submitted accurate accounts:
- Management reporting
- Budgeting and Forecasting
- Virtual Financial Director
- Tax Advice
- About Xero