Important Considerations Following You Company Registration

By Author: John Bregar
Total Articles: 27
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When you register a company, it is important to note that there are a number of factors following the initial incorporation that need to be considered, in order to ensure it meets all statutory requirements. Areas of confusion for those new to running a limited company include whether it needs to be registered for VAT, or whether they need to run a PAYE (Pay As You Earn) scheme. In addition, many people are unaware of the requirements that face them at the end of the company’s first financial year.

Whether you need to register for VAT after Company Registration is often a concern to new directors, who may be unfamiliar with recent legislation, or even what VAT is. VAT stands for Value Added Tax, and is the tax that is levied by the UK government on the purchase of goods and services; these can be produced domestically or imported from outside the UK. A company is legally required to register for VAT if its taxable turnover for the past 12 months exceeds a level of £73,000, or is likely to do so in the next 30 days. It is important to note that ...
... this VAT registration threshold is valid as at August 2011, and can be changed in the government’s annual budget. VAT is charged to the company, but it is common for the tax burden to be passed on to the customer. A company is only allowed to charge its customer VAT if it is registered to do so. Although they may not exceed the registration threshold, a company is still able to voluntarily register for VAT. This will allow them to enjoy image benefits and the ability to reclaim their own VAT costs.

Similarly, many new companies are faced with the question as to whether they are legally required to register as an employer, running a PAYE scheme. The PAYE system is the government’s method of collecting tax and National Insurance Contributions (NICs) from salaries in the UK. Therefore, it is a legal requirement for anyone who is employing and paying a salary following their company registration to run this system. This allows the employer to calculate, deduct and pay the right amount of tax from the salaries they are paying. There are certain thresholds, and if a company is paying below these amounts they are not required to register.

After company registration it may be easy for the directors to forget about their obligations and administrative expense, as it seems in the distance. However, it is important to bear in mind all limited companies must complete an annual return and annual accounts. Furthermore, the company will have a Corporation Tax return and bill to pay. Although this payment occurs after quite a long period after start up, the company is liable for tax on all their income during this time. It is therefore important they keep track of their earnings, to ensure they have enough cash to pay the tax bill when it is delivered.

The process of online company formation is relatively simple and inexpensive, though it is important to ensure you are up-to-date with all the statutory requirements that accompany incorporation. Failure to meet these could see your company liable to penalties and fines that make the experience a lot more costly.