WHERE LOCAL BUSINESS GROWS

Legal Entities - The Basics

You must choose a structure for your business. This structure will define your legal responsibilities, like the paperwork you must fill in to get started, the taxes you’ll have to manage and pay, how you can personally take the profit your business makes and your personal responsibilities if your business makes a loss. Find out how to choose the right legal structure for your business and how to change it if you find a new structure suits you better.


Sole Trader
 

If you start working for yourself, you’re classed as a self-employed sole trader - even if you’ve not yet told HM Revenue and Customs (HMRC).

As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them.

You can employ staff. ‘Sole trader’ means you’re responsible for the business, not that you have to work alone.

You’re personally responsible for any losses your business makes.

Tax responsibilities

You must:

  • send a Self Assessment tax return every year
  • pay Income Tax on the profits your business makes
  • pay National Insurance

You must also register for VAT if you expect your takings to be more than £83,000 a year.

Limited company
 

A limited company is an organisation that you can set up to run your business - it’s responsible in its own right for everything it does and its finances are separate to your personal finances.

Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.

Ownership

Every limited company has ‘members’ - the people or organisations who own shares in the company.

Directors are responsible for running the company. Directors often own shares, but they don’t have to.

Legal responsibilities

There are many legal responsibilities involved with being a director and running a limited company.

Types of company

Limited by shares

Most limited companies are ‘limited by shares’. This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for.

Company directors aren’t personally responsible for debts the business can’t pay if it goes wrong, as long as they haven’t broken the law.

Example

A company limited by shares issues 100 shares valued at £1 each when it’s set up. Its 2 shareholders own 50 shares each and have both paid in full for 25 of these.

If the company goes bust, the maximum the shareholders have to pay towards its outstanding bills is £50 - the value of the remaining 25 shares that they’ve each not paid for.

Private company limited by guarantee

Directors or shareholders financially back the organisation up to a specific amount if things go wrong.

Public limited company

The company’s shares are traded publicly on a market, such as the London Stock Exchange. You can also consider setting up a private unlimited company as an alternative legal structure. Directors or shareholders are liable for all debts if things go wrong.

How to set up a limited company

You must register the company with Companies House and let HM Revenue and Customs (HMRC) know when the company starts business activities. Tax responsibilities Every financial year, the company must:

  • put together statutory accounts
  • send Companies House an annual return
  • send HMRC a Company Tax Return
The company must register for VAT if you expect its takings to be more than £83,000 a year.

If you’re a director of a limited company, you must:

  • fill in a Self Assessment tax return every year
  • pay tax and National Insurance through the PAYE system if the company pays you a salary

'Ordinary' business partnership
 

In a business partnership, you and your business partner (or partners) personally share responsibility for your business.

You can share all your business’s profits between the partners. Each partner pays tax on their share of the profits.

Partnerships in Scotland (known as ‘firms’) are different, and have a ‘legal personality’ separate from the individual partners.

Legal responsibilities

You’re personally responsible for your share of:

  • any losses your business makes
  • bills for things you buy for your business, like stock or equipment
You can set up a limited partnership or limited liability partnership if you don’t want to be personally responsible for a business’ losses.

A partner doesn’t have to be an actual person. For example, a limited company counts as a ‘legal person’, and can also be a partner in a partnership.

You must choose a name for your partnership and register it with HM Revenue and Customs (HMRC).

Tax responsibilities

The nominated partner must send a partnership Self Assessment tax return every year.

All the partners must:
  • send a personal Self Assessment tax return every year
  • pay Income Tax on their share of the partnership’s profits
  • pay National Insurance
The partnership will also have to register for VAT if you expect its takings to be more than £83,000 a year.

Limited partnership and limited liability partnership
 

Your liability for business debt differs depending on whether you’re a limited partnership or limited liability partnership (LLP).

You can share all the business’s profits between the partners. Each partner pays tax on their share of the profits.

Limited partnerships

The liability for debts that can’t be paid in a limited partnership is split among partners.

Partners’ responsibilities differ as:

  • ‘general’ partners can be personally liable for all the partnerships’ debts
  • ‘limited’ partners are only liable up to the amount they initially invest in the business
General partners are also responsible for managing the business.

Limited liability partnerships (LLPs)

The partners in an LLP aren’t personally liable for debts the business can’t pay - their liability is limited to the amount of money they invest in the business.

Partners’ responsibilities and share of the profits are set out in an LLP agreement. ‘Designated members’ have extra responsibilities.

Tax for limited liability and limited partnerships

Every year, the partnership must send a partnership Self Assessment tax return to HM Revenue and Customs (HMRC).

All the partners must:
  • send a personal Self Assessment tax return every year
  • pay Income Tax on their share of the partnership’s profits
  • pay National Insurance
You must also register the partnership for VAT if you expect your business’s takings to be more than £83,000 a year.

Unincorporated association
 

An ‘unincorporated association’ is an organisation set up through an agreement between a group of people who come together for a reason other than to make a profit, eg a voluntary group or a sports club.

You don’t need to register an unincorporated association, and it doesn’t cost anything to set one up.

Individual members are personally responsible for any debts and contractual obligations.

If the association does start trading and makes a profit, you’ll need to pay Corporation Tax and file a Company Tax Return in the same way as a limited company.

Change your business structure
 

What you need to do depends on the type of business, if you’re VAT-registered and if you employ people.

Set up the new structure

Follow the normal steps to setting up as a:

  • sole trader
  • business partnership
  • limited company
  • limited partnership
  • limited liability partnership (LLP)
Tell HM Revenue and Customs (HMRC)

If you’re VAT-registered, you must tell HMRC within 30 days of the change or else you’ll face a penalty.

You will need to either:

  • cancel your VAT registration and re-register
  • transfer your existing VAT registration
You can do this online or send a form to HMRC by post. The address is on the form.

If you employ people, you’ll also need to talk to HMRC about the change.

Sell your business

If you’re a self-employed sole trader, in a partnership or own a limited company, there are certain rules you must follow when you sell your business.

Close an existing structure

If you want to close down your existing business structure, follow the usual steps.

To no longer be a sole trader

You’ll need to:

  • tell HMRC you’re no longer going to be self-employed and they’ll cancel your Class 2 National Insurance contributions
  • complete a Self Assessment tax return as usual (you’ll then start to submit tax returns the next year for your new business structure)
To close a business partnership

You’ll need to make sure your nominated partner fills in a tax return when the partnership ends.

If the business partnership will continue without you as a partner, you must still complete a Self Assessment tax return as usual. You’ll then start to submit tax returns the next year for your new business structure.

To close a limited company

You’ll either need to close your limited company or make it dormant.

Changing to a public limited company or an unlimited company

It is possible to change a limited company to a public limited or unlimited company.

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5 results found 
Huddersfield chartered accountants play ball to raise money for charity

Monday 09 October 2017

Huddersfield-based firm Crowther Chartered Accountants held a social event at Huddersfield Lawn Tennis Club (HTLC) last month (Friday 29th September) to raise money for Forget Me Not Children’s Hospice and Macmillan Coffee Morning. Rallying together clients, business associates, partners and contacts, the day raised £840 from donations, a raffle and advertising opportunities. Commencing at 11.30am with coffee, attendees of all skill levels were then invited to play doubles tennis against each other, in a bid to clinch the ‘most outstanding player’ accolade. Other awards included ‘hardest working’, ‘noisiest’ and ‘smartest dressed’ players, to name a few. The full-day event marked one month since the appointment of business development manager David Busfield from HSBC. Michelle Crowther, business development director, said: “This was a really fun way to introduce David to our connections, socialise with new and existing associates and finish off the last of summer, while raising money for these fantastic charities. “Last year we also sponsored Kirklees and Calderdale Charity Lunch (KACCL) — the group which raises valuable funds for Forget Me Not Children’s Hospice. This event was another way for us to support them. And what better way to bring people together than on a tennis court with some food and fun games!” Jeremy Mills of Riley Dunn & Wilson clinched the top prize of best tennis player, with Crowther Accountants’ Kristian Lee taking second place. Tim Grimshaw — a business banking manager at HSBC — won ‘best entertainer’, after he dislocated his shoulder within five minutes of play. Jess Lees, corporate fundraiser at Forget Me Not Children’s Hospice said: “We are delighted that Crowther Accountants continually chooses to support our hospice. “They are a long-standing supporter of our charity and help to not only raise funds, but also awareness of the hospice across Huddersfield and Kirklees. We really value what they do for us!” Crowther Chartered Accountants provides accountancy, taxation and bookkeeping support to over 600 clients across Yorkshire and the rest of the UK. The firm has also just announced the recruitment of a business administration apprentice and an account manager.
Posted by Byram, Amy
Leading Huddersfield accountancy practice invites local businesses to get their thinking caps on for charity

Wednesday 06 September 2017

Sheards Annual Quiz Night Returns to raise funds for Kirkwood Hospice Sheards Accountancy’s annual quiz night is set to return on Thursday 12th October. Once again, the Sheards quiz master, Kevin Sanders, will create a brain-teasing quiz which will test the general knowledge of all those attending the event. The event will be in aid of local charity, Kirkwood Hospice, and will be held at the Waterloo Suite at Huddersfield RUFC from 6:30pm. Last year, thanks to the generosity and support from the local businesses that took part, over £740 was raised for The Town Foundation. Entry costs £50 for a team of 4 and will include a hot supper. There will also be a raffle on the evening to help raise more money for the fantastic work carried out by Kirkwood Hospice. Raffle donations are welcome. Kevin Winterburn, Director of Sheards Accountancy commented: “Our charity quiz night has become a popular event in the local business calendar and we are delighted to be able to host it once again this year. It will be our second fundraising event for Kirkwood Hospice, and we hope it will contribute to reaching our fundraising goal for this fantastic charity. We look forward to welcoming local businesses in what will surely be a night to remember." To book your place, please email Kevin Winterburn: kevinw@sheards.co.uk
Posted by Sheards Accountancy Ltd
Batley based haulage and storage companies bought out of administration

Friday 18 August 2017

Batley-based haulage solutions and storage companies have been acquired out of administration securing all 15 jobs. Charles Brook and Allan Cadman, insolvency practitioner partners at Poppleton & Appleby were appointed as the joint administrators of both companies on 10th August 2017. CIS Industrial Ltd and CIS Industrial Hire & Sales Ltd, both family businesses, have operated side by side dating back to the 1980s. They offer haulage solutions and storage facilities serving customers both locally and nationally from their premises in Birstall, Batley. Both Companies had suffered cash-flow difficulties in part caused by restrictive historic finance issues to the point where the companies were under imminent threat of being wound up through the Courts by HM Revenue & Customs. Immediately following Poppleton & Appleby’s appointment, the Joint Administrators undertook a ‘Pre pack’ sale of the business and assets of both companies, where the purchasers are the existing family management team. The deal saved the jobs of the workforce in its entirety and ensured the continuity of supply to their customer base. Joint Administrator, Allan Cadman, said “It is gratifying to be involved in such a matter particularly in a week where there has been a media spotlight on family-owned and run businesses. The deal not only saves the jobs of 15 people in the locality but provides continuity for customers and new opportunities for suppliers. The deal will ensure that the creditors’ position will be enhanced through this process as opposed to the winding up and shut down position which was narrowly avoided.”
Posted by Poppleton & Appleby Northern
Huddersfield-based Crowther Accountants strengthens management team with recruit from HSBC

Monday 14 August 2017

A former HSBC senior commercial banking manager has been appointed by Huddersfield-based Crowther Accountants as its new business development manager. David Busfield joins the firm’s 20-strong team with over 40 years’ experience in the banking industry. His role will see him generating new opportunities, working with existing relationships and managing sales activities. Starting his career with Midland Bank in 1976 — more latterly HSBC Group — he initially worked in the retail banking sector before moving into the commercial and corporate environment over 20 years ago. His career has seen him work in various roles, before being appointed to the senior commercial role five years ago. Throughout this time, he’s supported a wide variety of SME’s and corporate clients, covering both West and South Yorkshire. Whilst this is a new role created within the firm for David, he’s been an associate of Crowther Accountants for many years. He said: “In the past we’ve shared some of the same customers and I’ve always been impressed with the way Crowther do things. The team is extremely proactive, on-the-ball and quick to spot opportunities for clients. “So when this new role became available and I saw their plans for growth, I decided that I wanted to be part of it. I’m excited to be joining such a great team.” And David’s diary is already filling up with opportunities for the Crowther team – among both new and existing clients. Next month, the firm is hosting a social event at Huddersfield Tennis Club for Crowther Accountants’ clients, partners and contacts, as well as some of David’s own business and professional connections. Michelle Crowther, the firm’s business development director, added: “We’ve always had a fantastic working relationship with David — it’s been built on mutual integrity and trust over a number of years. He’s a very well respected member of the Leeds and Huddersfield business community and we know that he’ll be a great ambassador for the firm. “We’re delighted that he has joined us and, in fact, he’s already proved to be a brilliant addition to our team! His experience of dealing with small and medium enterprises across the region will only add to our reputation of delivering a first-class service to our clients.” Crowther Chartered Accountants provides accountancy, taxation and bookkeeping support to over 600 clients across Yorkshire and the rest of the UK. The firm is also set to further expand its team and is currently looking to recruit an accounts manager and has recently filled various trainee positions within the firm.
Posted by Byram, Amy
ABL Business expands into North Yorkshire

Wednesday 21 June 2017

Yorkshire-based business support consultancy ABL Business Ltd are expanding their operations into North Yorkshire. The company, which offers commercial finance and marketing support to SMEs, has engaged Fraser Irvine as an Appointed Representative to cover the county. Based in Harrogate, Fraser will be operating across the area, offering a full mix of commercial finance services. He will assist SMEs in raising the funds they need to trade, grow or stabilise their business, using all the funding lines and capabilities of ABL Business. It marks the third recent growth for the Cleckheaton-based company, who recently set up a new office in Scotland with two representatives just over a year ago and expanded into the North East region in March this year. Fraser Irvine is an experienced Independent Commercial Finance Broker and joins the company with an extensive career in financing businesses under his belt. He has spent almost 30 years working with asset and cash flow funders, which gives him a deep understanding of the financial needs of an SME business. Fraser has worked with new start businesses, as well as more established companies, arranging funding facilities to suit individual needs. His interest in business finance has also enabled him to gain extensive experience in the Management Buy-out, Management Buy-in and transactional market as a whole. He said: “I have known ABL Business and its owners, Andy Redman and Alex Beardsley for many years and really like the independent and client-focussed approach they adopt, so I’m very excited that I’m now joining the team. “ABL Business has access to a vast range of funders, which means I will benefit from being able to offer clients financial solutions that are tailored to bespoke needs. I am keen to help clients from new starts to multi-million turnover businesses to grow and achieve their full potential.” ABL Business Ltd and their appointed representatives have access to over 70 funders, enabling them to find an appropriate solution, no matter what a client’s financial requirements may be. ABL Business Director Andy Redman said: “We’re delighted to welcome Fraser to the team. He has a wealth of experience, which he brings with him from the financial sector, and in business too. Fraser, with his connections and knowledge, will be a real asset to ABL Business and to companies across North Yorkshire. His appointment has enabled us to expand our reach into yet another area and help even more businesses find funding packages that suit their specific needs”.
Posted by ABL Business Ltd
5 results found 
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