Part A 1A (Setting the business as a private limited company) The process of incorpartion:
Tosetup a limited company, you must have to do it register as an incorporate. To make an application to the Registrar of Companies
which requires complettation of some constititunal documents. Application will be reviewd by Regisrar of Company. Certificate of Incorporation
will be issued if your application has granted by Registrar (CA 2006 s.15)
In UK, you need to have a UK regeisterd address to form a company and if you are based on Northeren Ireland, you need to contact the Northern Ireland registry office. You can do it by online atCompanies House website. Alternatively, you can do it for a small fees by appointing an accountant, solicitor or agent. They will do this for you. Reigsation documents:
- Memorandum of Association (MA) (CA 2006. S . 8)
- Memorandum is one of the most significant document even it now as only subscibers must be agreed to form of company and take at least one share each.
- Companies act 2006, revoked the old prerequisite of posting the objects of the comany as the new approach is to regard comapnies as having unlimited objects unless they are explicitly restricted.
- Provisions from old style memorandums are to be dealt with as provisions of the Article of Association from 2008-s 28.
- Other Information: Toset up a limited company you need to do provide some basic information and a few signatures such as
- Name of comapnies
- name of all propsed Director(s) and Secretary(ies) before your company can be formed.
- Adrresse of regigtered office, and town of birth, telephone no, NI no, passport no, mothers maiden name, eye colour, father's forename.
- Articles of Association
- Wheather libility is limited
- Public limited or Private limited Co.
- Statement of share capital and initalshareholding or stament of guranee
- Statement of Compliance.
When a company becomes a corporation, it as a separte entity from yoursellf. Meaning it takes on an identityy of its own. Instead of one or two people dictating how company will be run.This makes it much easier sign contracts, enter into conrtact obligation and pay texes. However, the companyâ€™s stockholders become actual owner of the comany and board of director will be elected by them. In a companylimited by shares two key doctraines will operate such as 1)Corporate personality 2)Limited Liablity Corporate Personality:
Corporate personality indicates to the way that the law is concerned a company personality really exists seperated and not the same as its owners. As a result of this, a company can sue and be sued in its own particular name, hold its own particular property and vitally â€“ be obligated for its own debts. Despite the fact that it might be said after incorporation the company is the same it was before,and the same persons are directors or managers, and the same hands get the benifits, and the company is not in law the suscribers or trustee for them. It is concept that empowers constrained obligation for shareholders to happen as the debts belong to the lawful substance of the company and not to the shareholders in that company. Key Implications:
1. The company may claim property however its shareholders have no proprietary rights in any property having a place with the company. 2. Claims of the company's loans are against the company property and not the property of its members. 3. Company can borrow money and grants charges over its benefits. 4. Company has authorize to take legal rights and can be sued for breach of its lawful obligations. The history of corporate personality
Corporate legal identity arose from the activities of organisations, for example, religious orders and authorities which were granted by government to hold property and sue and be sued in their own particular right and not have depends on the privileges of the members behind the organisation. Over time the concept began to be connected to business wanders with an open interest component for example, rail building endeavoursâ€™ and pilgrim trading businesses. However, modern company law just started in the mid- nineteenth century when a series of Companies Acts were passed which allowed standard individuals to form registered companies with limited liability. The route in which corporate personality and limited liability interface together is best communicated by examining the key cases. Director Duties:
Director is a member of group of person who appointed to the board for supervising or leading the company or particular function of company. There are seven key duties of a director in accordance act with the companyâ€™s constitution.
- Duty to act within powers
- Duty to promote the success of the company
- Duty to exercise independent judgment
- Duty to exercise reasonable care, skill and diligence
- Duty to avoid conflicts of interest
- Duty not to accept benefits from third parties
- Duty to declare interest in proposed transaction or arrangement
These may not be restricted, waived or contracted out of, but rather companies may buy insurance protection to bear of director expenses in the occasion of breach. The solutions for ruptures of obligation were not classified, but rather take after regular law and value, and incorporate remuneration for misfortunes, compensation of illegitimate increases and particular execution or directives. Advantage: Startinga limited company is often a risky venture and quite simply because the company whose liability is limited. . This means that people put into money in the business (the shareholders) are only liable for any company debts. Despite that, limited company running a private limited company has so manyadvantages. 1)Itsaquick and easy to get started. Limited company setup is very easy now. You can all be done online. Long waiting time at Company House process to get ready the paperwork has gone now. Instead of that, you will do it in just few hours and the charge of incorporating is an appropriate expense against corporation tax.The Companies Act 2006,whollyoperativefrom 1 October 2009, made a number ofimprovements to makeit easier to run a limited company. In the continues quest to promote enterprise, The government keeps on inspecting approaches to give run companies the freedom to get on with business as to regulatory customs. 2)Separate entity: A limited company has its own legal identity from the owners. So third parties contract with the â€˜companyâ€™ not with director or member and shareholders. This means facts that company will exists beyond the life of its members.If they retired or die.The company will continues to exist and operate as regular basis. This ensures security of employee and members than other business structures. 3) Limitedliabilities The shareholders of an organization have a constrained or limited obligation for the debts of the business. The extent of their liabilities amount of shares if they have any unpaid amount on any nil or partly paid shares. It is often important them to realise that their risk is limited to these amount and if business fails they will not be liable beyond the amountof capital have been invested in business.In this way they canprotecttheir house and other personal assets from being sold to the business debts. Without such constrained risk, the ultimate risk of business failuremade him as apersonal bankruptcy. 4) Taxation and tax advantages Limited companies are usually pay taxes only on profits ( rate at 21%) and in thatt capacity are not subject to the higher(personal) tax rates set on sole traders or partnerships which can be reached at 40%.There are ways Limited Company form to turn over the members/directors and their interests. If you are forming and director of limited company, you should choose to pay yourself at minimum wages level because it is allow you to take advantage of the personal allowances which is Â£6475 in tax year. So you are required to earn over this amount before paying the income tax on it. 20% taxes on earning up to Â£37400.00 and, 40% on taxes earing over Â£37400.00. Then you can assess the advantages of paying dividends instead of a pay huge amount of taxes. Especially, when you pay tax on dividends only at 10% and thereare no NI (national insurance) chargeon them! There are some complexities with involves where you wish to pay [pension for retirements? Yes you can do it by using dividend pay method which is 10%. You can pay whenever you wish to pay during the company financial year as many times as you like. Actually it is more preferable to pay yourself and other member of company. It is also make you further incentive to work hard and make profit for the company,as dividends payments are made up of spreading of the businessâ€™s revenue. 5) Not usingacompany car Many people would like to use companycar. It is better off to not purchasingcompany car. You can use your own car and charged asbusinessmillage for tax purpose which you allow to use tax free of costforfuel andmaintenance which is also tax deductiblefrom company. So you are getting benefit two ways. Duties and liablities of limited companies termination and compulsary liquidation: Duties and liabilities:
To terminate a limited company, you must be ensure that all clients and agents are aware that you are ceasing trading and any agreement or contracts will be terminated. You will need to do following course to do that...
- Organization charge for the final period
- VAT for the final period
- Outstanding PAYE and National Insurance on payrolls
- Final accountancy fees
- Any remaining sums owed to trade suppliers
- Bank credits or overdrafts
- HP or lease outstanding, or whatever other continuous duties
- Money owed to directors or shareholders.
Before terminate the most important question is that, Can my limited company settle its all debts? If there is not sufficient money in business to pay all creditors in full, then shutting the company down turns into a considerably more included methodology and one that you are almost guaranteed to require to a professional advice to complete. Managing insolvency is outside the extent of this article, your accountant ought to have the capacity to give direction, while independent online resources, for example, the Insolvency Services can provide additional information and support. Closing time
Company termination process is reasonable straightforward. Once you have chosen the date of termination of company you should not do process any more transaction other that rewired by closure process. You have to ensure that all creditors have been paid in full. You need to notify HMRC to your intention of shutting down the company as early as you can. If you are VAT registered you need to cancel your VAT registration. You also need to run payroll to obtain P45 to yourself and other employees of your company as well as submitting P35 for Employer Annual Return and giving any unpaid PAYE and/or NICâ€™s. When you ensure that there are no money will come in or out form your business then you should prepare and submit final accounts. HMRC will calculate your corporation tax due which you have to pay in 9 months term time. Once this is done, any money remain will be taken as a dividend. You should not leave any funds to company bank accounts. After three months later of shutting down and paying all outstanding taxes and other commitments paid, you may apply to Company house for DS01 form to terminate your company permanently. Part B: Purpose of business:
The Company hopes to catch piece of the overall industry by turning into the ease pioneer in the comfort store industry by altogether decreasing one of the essential costs, which is labour. Through our totally mechanized shopping knowledge, clients will have the opportunity to shop for regular things at lessened costs, accordingly undermining rivalry, for example, 7-11, Am/Pm, Circle K, and other nearby comfort store chains. The conceivable outcomes for development are superb in the local area and in neighbouring communities as well. The Company: The Company is a joint venture start-up company between the principals, Mr Andrew and his partners, and the management of Mr. Paul smith, one of the countryâ€™s biggest and most successful wholesalers. The company will be incorporated as a class C organization in the condition of Mr Andrew with all shares held by private investor. Paul smith will claim 29% of Sheba Convenience storeâ€™s initial private shares with an alternative to procure a further 11% shares based on growth and profitability of initial five years. Sheba convenience store is relied upon to open its first store in Paddington, London in March of Year 2016. The company will be set up with a governing body. Mr. Ashely Cook, a previous senior supervisor of Paul Smith is slated for the position of CEO. Mrs. Cristina has acknowledged the position of CFO.