Post-Incorporation Steps: Essential Formalities After Registration
Following incorporation, there are several post-incorporation formalities that must be considered:
Finance
Procedure
Insurance
Changing the name post-incorporation
Changing the status of the company
Finance
One of the most important aspects to consider post-incorporation is finance. Your first step is to open a business bank account. If you’ve set up as a sole trader, the law states you are not required to have a business account, but having a separate account from your personal one allows for more efficient and accurate book-keeping and management of all your finances. Conversely, a limited company is legally required to have a separate account as it’s a separate legal identity.
Once your finances have been established and your business is making a profit, it will be subject to corporation tax on both income and capital profits at 19%. It is your responsibility as a company to ensure that this is paid to the HMRC by the deadline - 9 months and 1 day after the end of the accounting period (financial year). If the HMRC sends a notice for a company tax return, it falls upon you to file this regardless if you make a loss or have no corporation tax to pay. If you are a VAT-registered business, it is also important you report and submit this in a VAT return form.
Procedure
The Companies Act 2013 outlines certain procedures and legal requirements to be followed post-incorporation.
Following incorporation, it is advised that a board meeting take place within the first 30 days from the date of incorporation. This provides Directors with the opportunity to raise concerns, make changes, or discuss strategies.
Insurance
There are multiple types of business insurance depending on the nature of the company. Employer’s liability insurance is vital as it covers any employees, contractors or even individuals on work placements.
Another common insurance is public liability insurance which is essential if the activities of a company could foreseeably cause public injury or damage. This is applicable to small companies selling goods at organised events, online businesses and shop owners. For more information on the different types of insurance including commercial property and vehicle insurance click here.
Changing the name after incorporation
A company is required to affix its name at all places that it carries out business. If a company wishes to change its name, this can be done through a special resolution or express permission within the company’s articles of association. Needless to say, the new name must follow all the relevant requirements. Once a new name is decided upon, it will take effect and officially change once it has been submitted and registered at the Companies House.
Changing the status of a company
Private to public
Start-ups tend to incorporate themselves as private companies. However, as the company grows or aims to grow financially, it may be converted to a public company.
A private limited company may convert to public if the members of the company pass a special/written resolution which alters the company’s articles to fit the statutory requirements of a public company. The name must also be changed to reflect that it is a public company (with PLC at the end). Public companies are required to have a share capital of £50,000. This should also be met when re-registering the company.
The application to convert from private to public must include:
Printed copy of the articles, after alteration;
Copy of a balance sheet no more than seven months before the date of application;
A copy of a report from the company’s auditor, showing the amount of the company’s net assets at the date of the balance sheet was not less than the share capital and non-distributable reserves;
A statement of compliance - related to requirements being complied with and that there has been no reduction in the financial position of the company;
Fee of £20 paid to the Companies House, or £50 for same-day service.
Public to private
A public company that is already incorporated may decide to become a private company. This type of conversion is seen as a loss to the market (as its listing is removed from the stock exchange). As a result, shareholders may apply to the court to cancel or affirm within 28 days. The shareholders must either be holders of at least 5% of issued share capital or no less than 50 members may apply.
The conditions for converting, however, are less strict than transferring from private to public. As alluded to previously, in order to convert a company, the members must pass a special resolution to state that the company is no longer public, and the suffix ‘plc’ may change to ‘Ltd’ on the application. The application is to be made by the prescribed forms, with a statement of compliance attached. The application has a fee of £20, payable to Companies House, or a £50 fee is payable for same-day service.
Useful Links
Pay your Corporation Tax bill: Overview - GOV.UK
An introduction to tax for UK companies
What happens after you incorporate your company? - Mazuma
What happens after you set up a company?.
How to Register for Tax After Forming a Company | 1st Formations
What are the post Incorporation compliances for a company?
What happens after you register your company
You've Registered Your Limited Company - Now What? | 1st Formations
s173(1) of The Companies Act 2013
Accounts and tax returns for private limited companies: Overview - GOV.UK
- Authors: Tanisha Shah, Rita Almazuri & Sofia Martiello
- Authors: Tanisha Shah, Rita Almazuri & Sofia Martiello
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DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice. You should seek independent legal advice before relying on any of the information provided in this article.
