Setting up a ltd company before trading?

[98elise]

Its probably been covered before, and I'm hoping its a simple answer.

I need to set up a Ltd company for a possible new business. It won't start trading until the first project kicks off, but I want to be ready to go. It will be VAT registered

What can I do up front to have the company ready to go, but not actively trading.

[2 sMoKiN bArReLs]

Set it up
Open bank account
Get registered for VAT & PAYE. (Don't forget to do nil returns for PAYE or you'll cop £100 per month fine)
Register with data protection
File dormant company accounts
File annual return

(last 2 depending on how long it is before you trade)

Don't think there is too much more to do until you get underway

[Eric Mc]

I wouldn't bother registering for PAYE until the company actually starts trading and the directors or staff start receiving salaries.

Otherwise, as has been stated, you will have the hassle of having to file "Nil" returns under the RTI system with the danger of penalties for missing the monthly filing deadlines.

[2 sMoKiN bArReLs]

Eric Mc said:

I wouldn't bother registering for PAYE until the company actually starts trading and the directors or staff start receiving salaries.

Otherwise, as has been stated, you will have the hassle of having to file "Nil" returns under the RTI system with the danger of penalties for missing the monthly filing deadlines.

I fell into the trap of registering for PAYE and then not submitting a nil return. Those very nice people at the tax office did, in the end, waive £800 of fines.

[98elise]

So as long as I don't register for PAYE now, I can set pretty much everything up, and not have to interact with HMRC until the accounts are due?

What about VAT which would be due 3 monthly? Ideally i would like to get the registration sorted up front (as it can take a while), but don't want to do zero returns every few months when I'm not yet trading.

[Eric Mc]

Part of the process of setting up for VAT involves giving HMRC an idea of your sales levels over the next 12 months. If you tell them that the sales levels are well below the VAT Registration Threshold, they may block your VAT application.

If you do manage to register, you will need to submit quarterly returns, no matter what the level of sales is.

[98elise]

Eric Mc said:

Part of the process of setting up for VAT involves giving HMRC an idea of your sales levels over the next 12 months. If you tell them that the sales levels are well below the VAT Registration Threshold, they may block your VAT application.

If you do manage to register, you will need to submit quarterly returns, no matter what the level of sales is.

Thanks. Sounds like I should leave VAT registration until I start the first project.

[2 sMoKiN bArReLs]

98elise said:

Eric Mc said:

Part of the process of setting up for VAT involves giving HMRC an idea of your sales levels over the next 12 months. If you tell them that the sales levels are well below the VAT Registration Threshold, they may block your VAT application.

If you do manage to register, you will need to submit quarterly returns, no matter what the level of sales is.

Thanks. Sounds like I should leave VAT registration until I start the first project.

Don't leave it too late though. Last thing you want is paperwork to hold up commercialism

[Eric Mc]

It's a bit of a conundrum as to when you should register for VAT. The rules say that you should register once you are aware that you will be making VAT able supplies. That usually means when a trader knows they are going to break through the compulsory VAT registration threshold. For some traders, they know this will happen very soon after setting up their company. For others, it could be months, if not years, away.

You can voluntarilly register for VAT even if your sales aren't going to exceed the threshold, but registering when there are no likely sales for a long time is probably a bit too early.