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Companies need to follow rules set out by many different government bodies, written in various legislative documents. When setting up and running a limited company, you have to keep in mind all of the following:
- Complying with applicable industry regulations set out by professional regulators – for example, the Financial Conduct Authority, the Office of Rail and Road, the Law Society or the Environment Agency
- Complying with finance regulations – such as tax, payroll, HMRC, accounting, record keeping, Companies House and anti-money laundering regulations
- Employment law and workers’ rights
- Health and safety for workers and visitors to your offices/site
- General Data Protection Regulation (GDPR)
- Contracts and agreements with third parties
- Sector-specific permits, licences, permissions
It’s an expansive list! Our accountants at CIGMA Accounting are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.
CIGMA Accounting helps businesses around the UK grow while navigating the red tape. You can contact us here for a free quote.
Limited company obligations
This article is going to focus on the Companies Act 2006, which is the main piece of law setting out rules and expectations for limited companies. The Act outlines what are called ‘compliance obligations’ for companies. These are actions which companies are obliged to do in order to comply with the rules.
company records
1. Registered office
Companies must provide an office address which is able to receive letters and documents. This address must be in the country where the company was registered. You are legally required to display the address on all communications with clients, and your website.
2. Confirmation statement
Companies must file a Corporation Tax Return to HMRC, even if the company has no tax to pay. This must include details about:
- Capital allowances claimed for business asset purchases
- Gains on assets sold
- Directors’ loans that are unpaid
- Reliefs to be claimed
- Any losses carried forward
Businesses with a trade volume over £85,000 must also register with HMRC for VAT.
Your final tax obligation is Pay As You Earn (PAYE). The PAYE system collects taxes from employees at the source. You as the employer are responsible for running this system. This involves deducting income tax and National Insurance Contributions.
3. Directors
Aside from financial records, companies are also expected to keep up to date details about their addresses, directors, and shareholders. Incorporated businesses must supply the following information to Companies House:
This is an annual report which must record your:
- Office address
- Business activity
- Details of directors
- Ownership and division of shares
4. Event Driven Reporting
Companies must inform Companies House of changes such as:
- Change of directors, shareholders, or their personal details
- Change of office address
- Sales of shares
- Change of company name or constitution
This is in addition to the three statutory registers which businesses must keep.
Companies must appoint at least one individual as a director. Directors are legally responsible for running the company and ensuring reports are made. The director of a UK company does not have to be a UK resident and can live anywhere in the world. Directors must supply their personal information, including an address, which will be publically available.
financial statements
A company’s annual accounts are prepared at the end of a financial year. These accounts must include:
- A balance sheet of what the company owns, owes, and is owed by others
- An account of sales, running costs, and profit / loss made over the year
- A director’s report
This account needs to be sent to all shareholders, HMRC, Companies House, and anyone who attends the company’s general meetings.
You are also required to appoint an auditor for each financial year. An auditor’s job is to report back to a company’s members and the government about the company’s accounts. They are meant to give a true and fair view of the company’s financial records and whether they have been done properly.
Workplace pensions
UK companies are required to put certain employees into a pension scheme, a process called ‘automatic enrolment’. If you employ at least one person aged between 22 and state pension age, who earns more than £10,000 per year, this applies to you.
Business licences
A business licence is a permit issued by the government or a professional body that outlines how specific business activities should be carried out. The most easily recognisable example is that of a liquor licence, which authorises businesses to sell alcohol and under what terms they can do so.
The list of licences is extensive, but you can use HMRC’s online tool to find out which licences your business may need.
steps to complaince obligations
Mastering your compliance obligations is essential for success – this step-by-step guide provides an introduction to understanding & fulfilling them!
Step 1 - Conduct a Self-Assessment and Risk Analysis
Analysis
20%
When getting started, first conduct a self-assessment and risk analysis to identify any current or potential noncompliance issues. Evaluate the nature and breadth of your operations, processes, policies and regulations that may affect your compliance needs. This assessment can identify any areas that require actionable strategies to help ensure compliance maturity at all levels of your organisation.
Step 2 - Research Your Relevant Regulatory Requirements and Standards.
Research
40%
Complying with regulations and standards is an essential step for keeping up with compliance obligations. It’s important to research the relevant regulations and standards that apply to your organisation, in order to understand exactly what is required from you in terms of compliance. Identify any applicable laws, industry standards, or government policies which are relevant to your operations and need to be adhered to, as not doing so could result in harsh penalties for noncompliance.
Step 3 - Identify Gaps Between Your Compliance & Regulations.
Identify Gaps
60%
Once you’ve identified the applicable regulations, standards and policies, it’s important to review your current compliance procedures and ensure that they meet the required expectations. Compare your existing process to the regulations and identify any gaps between the two. If there are any discrepancies or potential risks, it’s essential to address them as soon as possible in order to avoid penalties or other consequences of noncompliance.
Step 4 -Implement an Effective Compliance Program.
Implement Program
80%
Before developing your compliance program, it’s essential to ensure that you understand the expectations and obligations of each applicable regulation. Once you’ve done this, you can create a comprehensive compliance program which will guide you through the process of meeting all legal requirements. This program should include risk and compliance assessments, processes for monitoring and ensuring ongoing compliance, and plans for regularly tracking and improving performance.
Step 5 -Monitor, Measure, and Document Your Compliance Efforts.
Monitor
100%
Once you have developed a compliance program, it is necessary to continuously monitor, measure, and document any efforts to ensure that your organisation is compliant. All changes to processes made as part of ensuring compliance must be tracked and regularly assessed. Your organisation should also institute an effective system for processing internal complaints related to any violations of law or policy. This system will provide critical information that can be used by the compliance team when it comes to improving compliance efforts.
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