Running a limited company

Once you have set up and registered your business, you may have a number of questions about running a limited company.

Given that a limited company is a separate legal entity from you, there are different rules when it comes to things like taking money from the business, paying yourself and employees, paying corporation tax, bookkeeping, and more.

Limited companies are legally separate entities from the owners, shareholders, and from the person who runs it, the director (or directors). Whether you are forming a new company from scratch or are transitioning from operating as a sole trader to director of a limited company, in doing so, you will inherit a number of different responsibilities when it comes to the day-to-day running of the business.

Once you have set up your company, you can begin trading straight away. A formation agent can expedite the process of getting set up so that you can start running things quickly; you will need some capital to cover the initial costs of getting up and running, a sum that can quickly be recouped once you begin turning a profit.

As director, there are a number of things that you will need to oversee as you get started, and as the company grows:

• Create a business plan – this can include your company USPs, target demographic/customer base, your market value and proposition, and other important aspects of what is going to make your business succeed. You will need to be accountable for this, and it can play a large part in the success or failure of any new venture.
• File the company tax return – you will need to pay Corporation Tax annually, and many directors will hire an accountant to make this easier.
• Manage the running costs and overheads – these will vary depending on factors such as the type of business you have, the size of your premises, how many staff you have and annual turnover. Remember to factor in the annual statutory fee of £15-£30 associated with keeping the company on the register at Companies House.
• Pay wages – you will need to pay yourself and your staff as the director of a limited company. You can receive your wages under PAYE, and if you are also a company shareholder, you can pay yourself in dividends where allowed.
• Manage staff - In the beginning stages of running a limited company, you may also assume responsibility for hiring staff, although as your business grows, you may hire someone to act as head of Human Resources to take care of this for you.

• Pay wages – you will need to pay yourself and your staff as the director of a limited company. You can receive your wages under PAYE, and if you are also a company shareholder, you can pay yourself in dividends where allowed.
• Manage staff - In the beginning stages of running a limited company, you may also assume responsibility for hiring staff, although as your business grows, you may hire someone to act as head of Human Resources to take care of this for you.

A formation agent can save you substantial time and money when it comes to setting up your company, which means you can begin trading and therefore turning a profit sooner.

In regards to running costs, this will depend on a number of things, such as whether you are a home-based limited company versus a business occupying a premises. Most directors choose to instruct an accountant to manage the books, for which there is an ongoing cost, and if you have anything in the way of a business consultant or adviser, this too could count as a cost. One advantage of being a limited company is the fact that you are allowed more in the way of expenses compared with a sole trader, and so you can offset many of these running costs against taxes.