The position of the company secretary has been dispensed with as a statutory requirement in recent companies act legislation, however, if you choose not to use the services of a professional company secretary it could end up costing you more than you save.
How?
Whether you have an officially appointed secretary or not, the company is still required to comply with statutory filing deadlines and file reports. Failure to do this could end up costing you heavily. For example, failure to file your accounts on time with companies house will cost up to £1,500 depending on how late they are. Get it wrong 2 years in a row, and the fines double. That’s potentially £3,000.
Still worth saving on the cost of a professional?
Possibly worse still, failing to file the annual return with companies house, can in extreme cases result in companies house striking the company off. If this happens, the company will cease to exist legally, and the assets (including any cash in the company’s bank accounts) will become the property of the crown. You could stand to lose everything you have created in your company.
Still worth saving on the cost of a professional?
Both the above are roles are traditionally discharged by the company secretary. If you have chosen not to appoint one, your accountant can normally discharge them for you. If you’re not sure why not give us a call, and we can let you know how we can help.
Hidden costs
A further role of the company secretary is to maintain the statutory books and records.
What this means is preparing forms for companies house, such as notices of changes in appointment in directors, maintaining the register of members (who own shares in your company) preparing minutes of directors meetings, and issuing dividend vouchers, and keeping a record of all of these on file.
Sound easy?
Well, ask yourself “am I happy to do this myself?”, “do I actually know what is needed?”, and “am I organised enough to do this myself?” In addition to the penal consequences of getting the statutory filings wrong, failing to maintain the statutory books could also end up costing you.
Not the tax man again!?
Yup, afraid so. The tax man is also out to get you. HMRC don’t like the tax status of owner managed companies, which benefit from low corporation tax rates, pay a small salary to the owner / directors, and then pay chunky dividends in the year.
Sound like you?
If yes, then watch out – if you don’t have the correct paperwork in place, then HMRC will seek to challenge amounts you think are dividends, and instead treat them as salary. This could mean that where you thought you had no tax or national insurance to pay on a dividend received, HMRC will charge you PAYE at your marginal rate (IE 20, 40, 60 or 45%) employees national insurance, and employers national insurance at 12% and 13.8% respectively. That’s a lot of tax!
Still think the few hundred quid you might save on not having someone fulfil the duties of the company secretary is worth the hassle of doing it yourself, and potential consequences of getting it wrong?
If not, call us; we’re not expensive devils, we’re guardians of your business.
The tax team at All Round Accounting Limited Tel: Uckfield 01825 729453
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