A limited company is a separate entity in its own right which is governed by its members (Directors).
There are different types of Limited Company; limited by shares and limited by guarantee. Limited companies report their income and expenditure in statutory annual accounts and their taxable profits to HMRC. Limited companies pay Corporation Tax on their profits. Distributable funds (profits after tax) can be paid to shareholders in the form of dividends. Shareholders of limited companies pay tax on their dividends via self assessment. Limited company accounts are submitted to Companies House and also to HMRC, as an attachment to the Corporation Tax Return.
Good To Know
Incorporation: When you first register a limited company you will receive various letters from both companies house and HMRC. It is important that these letters are kept as these contain important information which will be required to file your accounts and tax returns.
Accounting Year: A limited company’s accounting year end is dictated by the month in which the company was incorporated (registered at Companies House). For example, a company incorporated on 18th June 2018 would have a year end date of 30th June 2019. The first year’s accounts would cover the period 18th June 2018 to 30th June 2019. Future years’ accounts would cover 1st July to 30th June. Year end dates can sometimes be changed, where it is appropriate to do so.
Tax returns: The first year of Corporation Tax returns, using the example above, would consist of one return covering the period 18th June 2018 to 17th June 2019 and a second return to cover the period 18th June 2019 to 30th June 2019. Future returns would cover 1st July to 30th June. These dates can be affected by other factors such as the date your company started to trade, which could result in only one return being required for the first “year”.
Deadlines: As a general rule (first years can be different, don’t get caught out by this), limited companies have nine months after the accounting year end to submit the accounts and tax returns. Any tax due would be due at this time. We strongly recommend that accounts be prepared and submitted as soon as possible after the year end in order to have a clear picture of the business’ performance and time to ensure funds are available to pay any Corporation Tax due to HMRCs bit)
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