Seven Golden rules of running a Single Person Limited Company
Companies House statistics show that more people than ever people are choosing to set up their own business. It’s important that budding entrepreneurs and business owners understand their responsibilities alongside all of the benefits of running their own business.
With so much information, legislation and opinion out there, we’ve focused on seven key points that should make running a private limited company easier, better and more rewarding.
The Seven Golden Rules of running a Single Person Limited Company
1. Choose the right Accountant – this seems like an obvious start, but there are so many different kinds of accountants out there that this can become a mine field. There’s big accountants, small accountants, online accountants, local accountants and national franchise accountancy business. We would always recommend speaking to any Accountant before choosing them to help you, as you want to know that you’ll be able to easily get in touch with someone when you need them.
2. Set up a bank feed – Most providers of business bank accounts have a way to authorise your Accountant to view the money coming in and going out of your bank account. This not only means that you can have access to real time financial information but also your Accountant doesn’t need to nag you to send your statement in by post (costly) or by email (not always secure)!
3. Make sure you have the right insurances – If this is the first time you’ve had your own business then you may not realise that you have to have your own business insurances. The cost of these insurance will vary depending on how risky your job and what industry you work in. Basic business insurances will cost around £350 per year, which is of course an expense that can be put through the business.
4. Contract for Services – A ‘Contract for Services’ is what sets out the terms and conditions of the relationship with you and your client. This is a very important document as it will usually dictate what you will be doing, when you’ll be doing and when you’ll get paid for it. Sometimes a client will insist on you signing their standard Contract, so make sure you read everything carefully.
5. Pay for business expenses from your business bank account – All expenses that you put through the business need to be justified and properly accounted for. It will save so much time to use your business debit card for all business related expenses. Vice versa, make sure you keep your own private expenditure to your personal bank account, avoiding any potentially messy sorting out.
6. Taking money out of the business – As a Director there are generally three ways of taking money out of the business:
1. PAYE salary
2. Out of pocket expenses
How you structure taking money out of the business is very important, and needs to consider your personal circumstances. The more information you give your Accountant about your plans for the business, and personal financial plans, the better they can advise you to work toward them.
7. Know your deadlines – Starting up a business is exciting and rewarding, but don’t forget that you’ve got some important responsibilities to provide certain information and make sure you pay what’s owed by you as a Director, and on behalf of the business, on time. Submitting information late or not paying the right money could easily land you with some big fines. Your Accountant should make you aware of all relevant deadlines to ensure you stay on up to date and avoid any penalties.
If you’d like to know more about any of the points covered or starting up your own Limited Company business contact OBK Accounting on 01252 70 40 30 (option 4).