Saturday, 7 June 2008
2006 Companies Act Further Simplifies Limited Company Structure
In a number of features and articles, I have made reference to the fact that, for most of us, it will be preferable to run our business as a limited company, rather than as a self employed person or partnership, and in my last feature, I touched on some of the reasons why this might be the case, but what does it involve? Is it more work or more expensive? Will you have to have an audit, register for VAT or find a company secretary?
The latest Companies Act has now completed the task of simplifying the limited company process, by, amongst other things, removing the requirement to have a company secretary, from 1 April this year.
Other recent simplifications include:
• The audit requirement for small companies has been removed for companies whose turnover is below £5.6 Million.
• The requirement to have two directors has now also been removed.
• Limited companies were previously required to have at least two shareholders. This was, in reality, a bit of a pointless exercise, anyway, as business owners would simply issue 100 shares, 99 to themselves and 1 to their partner.
The net effect of all of this is that, from April this year, it is now possible to form and run a limited company with just one person, without the need to involve anyone else. The structure of the business, therefore, becomes as simple as that of a sole trader.
The other benefit of this is in the costs involved. The fact that most of us will never require an audit, will significantly reduce accountancy costs, and the simplified company structure means that you can now form a brand new limited company online from as little as £25.