FREEDOM BOOKS - The Midas Method

Legal Things

Running a limited company provides you with certain benefits and also lands you with certain responsibilities.

You have a legal duty to maintain accurate records of the company's board meetings and decisions taken therein. Also you must submit an annual return to companies house.

A annual return is simply a statement of the balance sheet and profit and loss sheet detailing the company's business over the previous year. These statements are held at companies house and may be viewed by anyone who cares to look at them. This means you too. You are quite free to examine the trading record of any company which is registered there.

Unfortunately, you can't submit the returns yourself. It's not that they don't trust you, but...! You must get an accountant to submit the returns for you, and this means paying the accountant a fee for this service. However, the fee is most unlikely to be very high if your turnover and profits are reasonable. Be prepared for some steep fees as the money starts to roll in though!

By the way, if your company doesn't trade at all, you can send in a 'zero return' without employing the services of an accountant.

It will be a year or so before you have to submit your first accounts, and they do allow you quite a bit of grace, however, eventually you will have to cough up the figures and this is likely to work to your disadvantage. Your first year's figures are not likely to be earth-shattering, unless you really HAVE found a 'Get Rich Quick' scheme, in which case can you let me know about it?

Once you have sent in the figures, any Tom, Dick or Credit Agency can check you out and spot immediately the size of company you are. This will only cause you a problem if you have lied to your customers about the size of your operation in order to get their business (and, of course, no-one has ever done that before), or, you are trying to get credit over and above the level which you can easily support. Anyway, there's not much you can do about it except to bluff your way through the first couple of years like every other company has since history began!

The advantage of being a limited company is that if the company goes broke, the liabilities are restricted to the assets of the company. In short, they can take your typewriter, but not your house.