Forming a UK Limited Company

Hi, im a Chartered Accountant!!!!

It's easy to set up a Ltd company.

But look into the other factors, namely how you get your money out, and taxation issues. Basically a Ltd Co is an individual on it's own - you need to pay corporation tax for the company on profits, and tax on the money you take out then as an employee (or dividend).

You need to chat with an accountant about this.

I was living in France when I created my first UK limited company, but I got my accountant to do it for me. I suggest you get an accountant first since you will need one anyway, and take advice from them.

Forming a company in the UK is quick and easy. You can electronically form one via a number of company formation companies (google them) for about £20. However as already said you need professional advice about the implications of forming a company over being a sole trader for things like tax and official paperwork.

Rich

as luck would have it myself and my partner are both accountants!

i've decided a ltd company is the way to go (as opposed to sole trader) as I have a full time job at the minute so don't need to draw a wage, i'll many extract the money via dividends.

do any of you guys/gals have any complications f the majority of earnings come from abroad?

thanks for all the info above all.

I have now formed a private Ltd company but have one more question from you all.

On my balance sheet i will presumably need to value my sites, preumably I'll need do this based on something like monthly profit x 12 months?

How do you all value your sites fro accounting purposes and also as they make more money presumably you have to increase their value on the balance sheet and charge appreciation to the p&l account? Is this how you all treat the value of your sites?

well probably yes. i guess the moral of the story for the rest of you is to not implicitly trust your accountant to do the best thing.

i qualified as an accountant a couple of years ago but despite this I have very little knowledge of accounting techniques from a technical perspective!

btw just incase you are worrying I am not practicing as an accountant!

Hi,

As others have said you need to take proper advice from a proper accountant. But remember with IM the risk is very low and if you do not go crazy your overheads are low, no stock etc, so you need to think is it worth the extra costs.
But as said before ask a proper accountant and he or she will put you straight.

Hope this helps
Andrew

thanks all.

will head over to UK Bus forums!

I have been amazed by how cheap and quick it is to set up a Ltd company - about £30 and only took about 20 minutes online. i realize the main costs are accountant fee for however after getting some initial advice i intend to put together my own accounts (along with the help of my other half who is a practicing accountant!).

I have already had conversations with someone at the bank and the inland revenue and it is funny how hard it is to grasp the concept of IM. after much explaining from me about what the business will do both turned round and said "ok so sort of like web design thern?"!!! made me chuckle!

If you are going to be making income from affiliate sales, which are often based abroad, I would seriously consider a completely different form of incorporation.

Look into setting up an offshore trust company structure as opposed to a limited company - especially one based in the UK.

A popular option is to create a two company structure where each company is based in two separate countries. The "holding" company in one, the other *and the bank accounts* in another.

The reason for this is mainly twofold:

Complete financial privacy and asset protection.
Completely tax free income.

How does this work?

The main company is set up in a stable country, for example the Seychelles.

The second company is set up in somewhere like Cyprus.

The Cyprus company issues a *confidential* trust document stating that the owner of the Seychelles company (you) is the beneficial owner of the Cyprus company. All bank accounts are tied to the Cyprus company. The confidentiality of the trust document is ratified by court apostille.

As you are a citizen of neither country, you are not liable for tax in any form on income that either company makes. As you are a UK citizen and your income is both made and held abroad, the same applies. However, you are liable for large sums that you bring into the UK, for example to your UK bank account.

Because of the court protection, should your affairs come under serious scrutiny, any investigation will only lead to an order against the Cyprus company. Only in *very* extreme cases, such as if you are under investigation for suspected international drug dealing or international money laundering will a deeper investigation lead to the court agreeing to reveal that you are the real owner.

This kind of structure can cost in excess of two thousand pounds as opposed to a couple of hundred for a typical UK Ltd Company structure, but the benefits are obviously worth the initial investment.

Tom

Tom,

Can I ask where you found about this, was it from a tax adviser?

I have looked into this structure in the past. What I found out was that as a UK citizen/resident, you have to pay tax on your worldwide earnings. This means that regardless of where your products are sold, or the country you are making profits in, you have to pay tax on them. This applies whether you are a sole trader, or whether you set up a company (anywhere in the world).

The structure you are describing is an attempt to hide earnings from the UK tax authorities, and I would imagine that some years down the line this information could easily come to light, resulting in a jail sentence. The structure you're describing is illegal.

This is not advice to anyone - I am not a solicitor or accountant - but from what I understand from my research, the only way for a UK citizen/resident to stop paying UK tax is to move countries to somewhere with a lower tax rate.

I am quite interested in this, because at an Internet Marketing conference I went to in London, there was a company specialising in this kind of set up doing a presentation. They basically said they can set it up for you, and as long as it is kept secret, no one is the wiser! What they didn't say is when the bank records eventually come to light, it is the individual that gets prosecuted, not the company that set it up for them...

I wonder if many UK marketers are using this structure and if they realise that it is illegal?