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Outline of how to buy a limited company.

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Introduction

Outline of how to buy a limited company Firstly it can be done directly with Companies House in Cardiff or Edinburgh by calling them and they will send you the forms to fill out. The advantage of this route is that it is relatively low cost, costing around �20. The main disadvantage is the paperwork involved and the danger that it might not be done properly if you aren't familiar with what's involved. Although the paperwork is not difficult, it is time-consuming and requires a solicitor to witness some documents, I will go into more detail about the paperwork later on in the letter. Secondly there are also companies which specialise in forming companies, called registration agents which you can find in the Yellow Pages, they will charge you anything between �50 and �150 so it's a bit more expensive. The main advantage of this route is that such a company should ensure all necessary paperwork is handled and the company is properly set up, saving you time and hassle. Finally plenty of accountants or lawyers will handle the formation for you. In many cases this will tend to be the most expensive route with many professionals charging anything from �100 to �250 for forming a company, although this should ensure your company is formed correctly. ...read more.

Middle

Fourthly you will have to decide who the members of the company will be and appointing of directors and secretary. This is known as the statement of first directors and secretary. A limited company should have a minimum of one director and a company secretary, as well as one shareholder. You would normally be the director and shareholder in the company. The company secretary role can be held by anyone you nominate and doesn't mean that person must have any relevant skills to hold that position. The next step is to submit copies of all the items I have just listed above to the Companies house. The copies of the memorandum and articles of association must be signed by at least two members. Also include the statement of first directors and secretary and intended situation of your registered office, showing: the name of the company, the address it is registered to, a point of correspondence to enable queries to be made, the details of the companies directors and secretary along with their signatures. A declaration of the companies compliance with requirements on application for needs to be included to confirm that all the requirements of registering a company have been met. It needs to be signed by a solicitor, secretary or director and it must be dated earlier than the other documents. ...read more.

Conclusion

A sole trader must prepare accounts every year purely for submission with its income tax return and for personal use in the business. The accounts are much simpler and less costly to create than limited company accounts which have to be audited. Also limited companies must file a summary of their audited accounts with the companies registration office. Limited companies also have to pay corporation tax which must be recorded in the final accounts, sole traders do not pay this tax they pay through income tax instead. The corporation tax is charged on a limited companies profits at 25 per cent of the first �50,000 and 32 per cent of everything above that. Income tax is charged to sole traders at varying rates, up to 46% on the profits earned by the business in any year, regardless of money taken out of the business for that year. The first �3,150 earned is tax-free, the next �10,000 is at a rate of 24 percent and everything above this is at 46 percent. Another difference is that a limited company can have any year end it chooses for its final accounts where as a sole trader must submit its income before January 31st each year and is liable also to a 10 percent surcharge for late submission. ...read more.

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