Limited companies

The provisions relating to company formation are contained in Parts 1 to 7.

A company name must not be offensive or suggest any connection with government or public authority, unless permission is granted by the Secretary of State.

Who is a director? What are their legal responsibilities?

The general duties required of a director are set out in seven sections of the Companies Act.

The position of company secretary in a private company is now optional. Thus a company can operate with a sole director.

An auditor of a private company must be appointed for each financial year of the company, unless the directors resolve otherwise on the grounds that audited accounts are unlikely to be required.

The turnover threshold which currently exempts most companies from a statutory audit is £6.5 million. However, small companies still have to produce full statutory accounts.

Shares in a limited company having share capital must each have a fixed nominal value and a share must be distinguished by its appropriate number, unless if at any time all the issued shares in a company are fully paid up and rank pari passu for all p...

Where a service contract is, or maybe, longer than two years. This is a complicated area of the Act and we recommend that advice be sought with regard to long term service contracts.

Subject to certain exemptions, a company that meets the small company criteria in respect of a financial year is exempt from the requirement to have an audit of accounts for that year.

The Companies Act requires a company to keep records of its director's meetings. The responsibility for these records rests with the company's Board of Directors.

Suggestions on how to reduce the time taken in accounts preparation.

If two or more companies are controlled by the same person or by “connected persons” (such as husband and wife, or father and daughter), the amounts above are divided by the total number of companies.

A company's financial year is determined by its accounting reference date in each calendar year.

HM Revenue & Customs charges interest on underpayments of tax, and pays interest (repayment supplement) on overpayments. The rate of interest paid on overpaid tax is lower than the rate charged on underpayments, and interest rates are adjusted frequently in line with commercial interest rates.

For limited companies subject to corporation tax expenditure is on or after 1 April 2009, for unincorporated businesses expenditure is on or after 6 April 2009.

Benefits in kind are assessed on all directors and employees whose salary and benefits combined are £8,500 or more. Remuneration by way of benefits is often attractive to employees, especially if they are paying the higher rate of income tax, because the benefit may either be tax free or subject to less tax.

Details of how the tax system works with company cars.

There are a number of schemes intended to encourage employers to make arrangements for their staff to travel to work by more environmentally beneficial methods.

The Companies Act permits a company to change its name. The provisions governing name change are found in sections 78 and 79. This may be achieved either by special resolution of the members or by other means provided by the company's articles. There are also p...

Expenditure incurred before the company year end might reduce the current year's tax liability instead of next year's. Bringing forward expenditure by even a few weeks on, for example, building repairs, advertising, sales and marketing campaigns, and any other item deductible from profits can accelerate the tax relief by twelve months.

Details of corporation tax rates and bands.