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Part Four - To Limit Liability or not?

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This series is looking at the common formats of trading as a business. There are however, also administrative matters to consider when starting up a business depending on the format adopted.

  1. Insurance

Insurance should be taken out in the business name. For example, public liability, professional indemnity and employer’s liability.

  1. Bank Account

From a practical point of view it is essential that a business has a bank account. For a partnership or a private limited company, the bank will require partners or directors to sign a mandate form in relation to signing cheques.

  1. Stationery

If you are a limited company your letterhead must include the full registered name, number and place of registration (e.g. England), the address of the registered office, VAT number and either the names of all the directors or the names of none of them.

If the company trades under a business name, the company name must appear on all stationery as must an address within Great Britain where documents can be served on the company, which is usually the registered office.

  1. Employees: PAYE and National Insurance

If the business or company is to have employees working for it, often the directors themselves will be employees. Then the directors must contact the local tax inspector to arrange for the deduction of income tax from wages under the PAYE scheme and should arrange with for the payment of national insurance contributions.

  1. Registration for VAT

Your VAT taxable turnover is the total of sales and certain other supplies that you make that are subject to VAT, including supplies that are zero rated. If you are in business and your VAT taxable turnover is going to exceed the VAT registration threshold then you must register for VAT. You must also register for VAT if either of the following applies:

  • You think your VAT taxable turnover may go over the threshold in the next 30 days alone
  • You take over a VAT-registered business as a going concern

Additional considerations for a company:

  1. Statutory Books

The statutory books comprise the register of members/shareholders, register of directors, register of company secretaries, register of directors’ residential addresses, register of people with significant control and may also include registers of allotments and transfers, register of charges (legal requirement for charges created per 06th April 2013), minutes of board meetings and of general meetings, accounting records and copies of director’s service contracts.

  1. Directors service contracts

Consider putting in place executive service contracts to govern the relationship between the Company and its directors.

  1. Shareholders Agreement

A contract between the shareholders of a company to regulate the relationship and sets out agreed policy decisions.

If you want more information regarding setting up your business. Please contact our Head of Corporate, Margaret Evans at Margaret.evans@fdrlaw.co.uk. You can also contact Margaret or our commercial team on 01925 230 000.

**This article does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest. Specialist legal advice should always be sought in any particular case **