“Distribution” is the general term used to describe a payment made by a company to its shareholders based on their shareholding. A “dividend” is a distribution of a portion of the company’s earnings to a class of its shareholders. Usually, in smaller companies in which the shareholders are also the directors, a regular dividend is paid, because dividends can be more tax-efficient for both the company and the recipient. In larger companies, however, shareholders expect to be able to participate in the company’s profits. In this article I will outline the different types of dividends and will answer the most frequently asked questions. Read full article »
Wisteria news category: Tax
Have you recently incorporated a business or just started a new business? If the answer is YES, then it is important that you are made aware of the key tax consequences/issues that you may face going forward.
Choosing the legal structure of your business is one of the most important decisions one should make when forming a company. The structure is of a pivotal importance as it defines your legal, financial and personal responsibilities as well as the amount of taxes you are required to pay. Read full article »
The flat-rate scheme is an optional VAT scheme designed to reduce the administrative burdens for small businesses. Unlike the standard VAT accounting, the flat-rate scheme saves time by shortening the process of recording VAT on sales and purchases. Read full article »
A dormant company is one that has no financial transactions that would normally be entered into the accounts. Whilst HMRC allows for some transactions such as writing a business plan, Companies House allows no accounting transactions with a few exceptions, such as filing fees and shareholder capital being paid up. Read full article »
In many small companies the only director is also the only shareholder. The question then arises as to whether that individual should pay themselves a salary or rely solely on dividends for their income. Company profits are already subjected to Corporation Tax and are not usually taxed when distributed as dividends. In contrast a salary is subject to Income Tax and National Insurance deductions. Read full article »
Once your company is incorporated you are required to submit a number of documents annually to Companies House or HM Revenue & Customs (HMRc):
- The Annual Accounts (Statutory Accounts) are a set of accounts containing a balance sheet, a profit and loss account and notes about how the accounts have been prepared. Read full article »
The two main government bodies you will need to interact with when you form a company in the UK are Companies House and Her Majesty’s Revenue and Customs (HMRC).
When you incorporate your company or receive advice from a professional adviser regarding your business you may want to consult with a chartered professional. This can help to ensure that the advice that you receive is of high quality and that it the adviser is up to date with current changes to accounting, tax and company regulations.
If you are non-UK resident and would like to incorporate a UK limited company, you can take advantage of our easy online formation process with expert support. Our basic package costs just £24.99 and includes the incorporation of your company with Companies House and electronic copies of the key company documents. In addition to this, you can take advantage of our free bank referral service and a one hour accountancy, tax and business advice meeting with one of our Chartered Accountants, tax or business advisers.