When you’re starting up a new creative agency, it all seems like smooth sailing at first. It’s exciting. Fun. New. Challenges are just that – a challenge.
Until you get stuck.
Whether it’s traffic on the M60, snow on the Cheshire hills, or a project roadblock in your new startup, it will really affect your creativity and your profit.
Here are some of the top 10 ‘sticking points’ for creative agencies, particularly in relation to setting up a new limited company:
1) I’ve incorporated my company and I’m ready to trade. When do I tell Companies House?
You don’t! Once you’ve incorporated, Companies House just assumes that you’re active and trading, leaving you to get stuck into business and start making money.
2) When should I notify HMRC about my new creative agency?
Same deal. As a new business, HMRC just assumes like Companies House that you’re eager to get working, be active, and start trading right away. You only need to let them know if it’s otherwise.
3) I’m all set up as a limited company, but not quite ready to start. What do I do to be dormant?
Being a dormant limited company doesn’t mean you can get sleepy with your paperwork. You still need to file dormant accounts to Companies House, but it’s easy enough to do this online. Just make sure you’re aware of the deadline and submit before then, to avoid any financial penalties.
You also won’t have any corporation tax returns due during the period, so you need to let HMRC know in writing.
4) With my new company, I’m now a director. What do I need to do?
You can’t sit back and watch the profits come in just yet. Even if you’re not taking any money, it’s a legal requirement that you submit personal tax returns. You’ll also need to get yourself an SA1 form. Download it online, and use it to register for self-assessment, within 3 months of setting up.
5) I need to know my company’s year end. What is it?
It’s easy to find your company’s year end, just search online for ‘Webcheck’, and use Companies House Webcheck to get the date. But it’s simple to remember – it’s automatically the end of the month in which you first incorporated!
6) Can I change my company’s year end, to better fit with my business?
Yes, if you need to change your year end to something more appropriate for your agency, you can do this online via Companies House. However, you first need to request your 6-digit Companies House authentication code, which will be sent to your registered office. Give us a ring and we’ll show you how to get that!
7) Now I know the company’s year end, what do we have to file?
The statutory requirements dictate that you have to file an annual set of accounts, an annual return and your corporation tax return. We can help you with these, so don’t worry. And as we said earlier, each director needs to file a personal tax return too.
8) I have to submit both a set of accounts and an annual return? What’s the difference?
We’ll help you with both, but the annual return is quite easy. It’s just a summary you submit to Companies House which details everything that’s happened in the business during the last twelve months – key activities, names of directors & shareholders, and the division of share capital.
The annual accounts are much more complicated, and take a lot longer. They detail all the nitty gritty of the business, including all the profit you’ve made (hopefully!) and everything you own or owe at the end of the year.
9) But then there’s also corporation tax. Why do I need to make two returns and pay twice?
It’s very often the case that the date you set up your company falls between two tax years. Because HMRC don’t allow a set of accounts and the subsequent corporation tax return to be longer than 365 days, you’ll need to submit two different returns, and make two different payments.
It doesn’t change anything overall, it just means a bit more work with two different reference numbers, and two different payments. Your tax bill doesn’t change. From your second year onwards, you just make one return.
10) We’re making some changes to the company, including a new address and new directors. What do we do?
Again, this is easy enough to change online with Companies House, as long as you’ve got that 6-digit authentication code! Once you have that, you can add or remove directors, and change the registered company office to your new address.
These are the most common questions about a start-up, but there are undoubtedly many more.
A good accountant will be able to answer questions you might have. A great accountant (like a great friend) will ask those questions you hadn’t thought of, and not be afraid to tell you when you’re wrong
If you need further help than these FAQ’s can give, just ask us below, and we’ll explain the issue and add it to our FAQs.
