Many people reading this will no doubt already be company directors, while a few may be thinking about establishing a company and becoming its director.
The beginning point for any company’s director, and consequently the starting point for any company’s director, is to learn a little bit more in detail about the roles and duties of the directors.
Although a company is owned by its shareholders, they entrust the administration of the company to the directors (even though in most cases, the shareholders and the directors are the same people). Clear and reasonable duties for the directors are essential both to safeguard the interests of the subscribers as well as the directors themselves. Consequently, the directors understand what is required of them, what they are to do and what not to do. Should the directors fail in their duties, the consequences could be serious.
General duties that apply to all directors as laid out by the companies’ act 2006:
A responsibility to function within their powers, as laid out in the company’s Articles of Association, memo and as well as other sources
A responsibility to improve the company’s success.
A responsibility to apply independent judgements
A responsibility to apply realistic diligence, skill and care
A responsibility to circumvent clash of interests
A responsibility to reject benefits from any third party
A responsibility to unveil interests in a planned arrangement or transaction
Even though it has no advantaged status in law, the obligation to promote the company’s success lies at the heart of a director’s responsibilities. Other responsibilities of directors, whether it is specified in UK legislation or not, can be seen as following on from that. In increasing the company’s success for the benefit of its shareholders as a whole, the Companies Act states that directors need to think about the effect of decisions on the reputation of the company and the interests of other subscribers including workers, shareholders, clients, suppliers, as well as the community at large.
Generally, the directors may apply all the powers of the company. However, the company’s Articles of Association may set limitations on the powers of the directors in some areas– a common instance includes limitation on new shares allocation in the company among others. Thus, it is typical of the directors to offer new shares to the current shareholders prior to inviting applications more widely.
Additionally, the articles will define how decisions should be made. Although limited company directors will, as a board, jointly bind the company, the articles generally give power to the board of directors to entrust powers to each director as they deem fit. The specific role of each director within a company may vary based on the company size, the number of directors, and the nature of the company’s business. The role, expertise and experience of a director will likewise have an impact on their areas and influence their areas of responsibility and coverage.
Forming a new company is an exciting time for anyone. Over the years, the UK authorities have made it easier than ever to open a company. You don’t need to fill in lots of forms and send them to Companies House. It’s a matter of using their online portal to form your company.
Once you have finished, and your company has been accepted, you will be requested to print out various forms. This is will confirm that your company has been officially incorporated. It may sound too easy, but there are no hidden catches here.
But what are the biggest mistakes people make when doing this?
Forming the Wrong Company
There are many company types you have to take into account. The average small business will be better off forming a company that allows them to trade as a sole trader. It may be good to have a limited company, but limited companies come with far greater reporting responsibilities, and this extra work doesn’t always pay dividends.
You can form practically any type of company online. Make sure you do your research and don’t form a certain type of company on a whim.
Not Specifying the Shareholders
Technically, you can have as many people as you like working for your company, but if they own any part of that company they have to be mentioned. Shareholders don’t work in the same way as they do in other parts of the world. With a private limited company, for example, the shares are valued at what you say they are valued at, and you can dole them out as you please.
Only public companies have shares that are traded on the open market, and the company needs to generate enough revenue in order to become this type of company.
If you are sharing the company with someone else, they must be mentioned when you form your company, or at least added afterwards. Adding them before the company is formed will involve them placing their names on the Memorandums of Association, which is essentially an agreement to form the company.
How the Company is Run
This is where people tend to start making errors. Dictating how the company is run is a deceptive task because people assume it refers to the day-to-day running of the company. For most companies, they will use what’s known as ‘standard article’. These are a basic legal model that can be inserted via the Companies House website.
You can change this, but by doing so you are waiving your right to register your company online. The vast majority of companies have no business changing these.
Choosing the Wrong Company Address
The company address is more important than you think. It’s where official communications between the UK government and you will be sent. It doesn’t have to be the offices you are operating out of. You can use your home address. The only restrictions are that it must be in the company’s home country, and it has to be a physical address; so you can’t use virtual addresses.
What a lot of people don’t realise is that this address is available to the general public via the official register of the companies of the UK. Make sure you are comfortable with this before choosing your home address.
Failing to Register for Corporation Tax
Sole traders don’t have to worry about corporation tax, which is why most prefer to register as this type of company. If you have decided to start a private limited company, you have a legal duty to register for corporation tax within three months of forming your company so you can begin trading.
Without registering for it, you are legally unable to begin trading. And even if you never earn enough to actually pay corporation tax, you still have to be registered for it and you still have to file.
The responsibilities of a company director are to file your company right. By avoiding these mistakes, you can avoid running into trouble. What are the biggest challenges you have faced when trying to form your company?
There are an increasing number of foreigners opening companies in the UK. The majority of formations agents receive questions regarding the opening of a bank account all the time. The brutal truth is that although you need a limited number of documents to form a limited company, opening up a bank account can be difficult.
Banks tend to be far more conservative and they commonly reject applications from overseas residents. This article is going to show you what you need to do to open a bank account as a foreigner.
You Don’t Need a UK Bank Account
One of the misconceptions people have about forming a new company online is that they need a UK bank account to operate. In many countries, it’s necessary to open an account in order to trade. The UK allows you to use your account from abroad, as long as you make it clear that you are using a foreign bank account.
But it’s always better to have a UK bank account because it makes it easy to trade. Imagine the difficulties of trying to make overseas transactions all the time. It’s a hassle you don’t need when opening a company.
Do You Need to Live in the UK?
No, it’s not necessary to live in the UK in order to open a bank account. It’s wise to acquire UK residency before applying for one, though. Most banks won’t entertain an application unless you have UK residency. This is due to concerns over fraud and the additional administration costs incurred by them.
A registered office address isn’t enough for most banks. You need to prove that you have residency and you need a home address.
What Options Do You Have for Business Bank Accounts?
The following information was correct as of this writing. The bank account opening process is the same for practically all banks. You will have to submit both personal and company information. Luckily, UK banks have a step-by-step process you can follow, and you can always have your agent handle most of the process for you.
A face-to-face interview is always required, and you will have to submit suitable identification, such as a passport or UK driver’s licence. The following banks have different conditions regarding non-nationals opening business bank accounts.
HSBC – Non-resident directors can open an account, but the owners of the company have to visit the UK and present a photographic ID, along with proof of address. They will also have to sign a bank mandate.
Barclays – There are no stipulations for opening international bank accounts with Barclays. But international accounts must begin from their branch in the Isle of Man. You will still have the same benefits as onshore account holders, but your account will be classified as offshore.
A Barclays account does demand that you have to place £25,000 into that account within the first month of opening it. Sometimes they do waive the requirement if you include a covering letter in your application, though.
What is the Situation Like on the Ground?
The way to ensure that you get your application accepted is to look at the situation from the point of view of the banks. You have to assume that they are always looking at the potential for fraud. An offer to leave a large deposit in the account will help them to believe that you are serious.
If you can prove that you have an address in the UK, this is another plus point in your favour. Multiple directors and shareholders is another sign of trustworthiness because they are not relying on one single person to deal with them. If something goes wrong, they have multiple points of contact.
In general, the process of opening a business bank account in the UK isn’t too hazardous. It can take a few weeks to open, so it’s best to get this out of the way before you formally start trading.
What are the biggest problems you have experienced when it comes to trying to open up a business bank account in the UK?
Thinking of a cloud accounting system for your business finances but not sure which one — here’s the ultimate review!
With Making Tax Digital (MTD) approaching and with HMRC insisting that small business, many of whom currently use spreadsheets, to move to cloud accounting systems we thought we’d compare the 2 most popular…
Developed in 2004, QuickBooks Online beat Xero to the accounting scene by two years. With advanced accounting features, beautiful invoicing, 400+ integrations, it’s easy to see why the software is so renowned.
Xero is a robust accounting solution that rivals QuickBooks in terms of capability and popularity. It’s been around since 2006 and offers fully featured mobile apps, amazing customer service, access for unlimited users, and an impressive feature selection.
Both Xero and QuickBooks Online offer strong accounting. Each uses double-entry accounting and supports cash-basis and accrual accounting. In addition, each software has strong accounting features including bank reconciliation, fixed asset management, a chart of accounts, and plenty of accounting reports.
QuickBooks Online and Xero offer very similar features. In some areas, like invoicing, project management, QuickBooks Online far exceeds Xero (especially since Xero has no project management or lending). In other places, like contact management, Xero provides the better feature. So how do we decide who is better?
In the end, it all comes down to accessibility. QuickBooks Online offers many great features — project management, budgeting, inventory, etc. — but there’s a catch. These features are limited to the more expensive plans. Xero doesn’t limit features by plan, making it a more robust and realistic solution for many users, which is why we gave it the win for this section.
For some businesses, QuickBooks Online is a much more affordable option. Xero’s smallest plan only gives customers 5 invoices and 20 transactions, which renders this plan useless to many small business owners.
For medium to large businesses, Xero is the better choice. Xero offers payroll at no additional cost and supports unlimited users for every plan. QuickBooks Online doesn’t even come close in this regard.
This category is a draw. The real winner will depend entirely on your business size and needs.
Hardware & Software Requirements
As cloud-based software, QuickBooks Online works with nearly any device so long as you have internet access and are using one of the following browsers:
Internet Explorer 10+
Xero is also cloud-based; it’s compatible with nearly any internet-enabled device so long as you are using one of these browsers:
Internet Explorer 11
Both QuickBooks Online and Xero offer mobile apps for Android and iPhone.
The only reason Xero takes the cake in this category is that you can use Xero with Linux, a capability QuickBooks Online currently doesn’t offer.
Users & Permissions
Xero offers unlimited users for all five of its pricing plans. The company also provides some of the strongest user permissions in cloud accounting. QuickBooks Online only supports one, three, or five users depending on your pricing plan (you can add up to twenty-five users total, but the cost adds up fast).
In the end, how can you beat unlimited users?
Ease Of Use
QuickBooks Online used to be the clear winner here, but the company has recently made changes to the UI, leaving the software difficult to navigate (read more about this in our complete QuickBooks Online review).
That said, Xero is only easy to use once you get to know the software. There is a steep learning curve and setup can be quite intensive. Xero offers plenty of support tools to get over this learning curve (which is more than QuickBooks Online can say). Because of QuickBooks Online’s recent downgrade and Xero’s steep learning curve, the programs are tied in this category.
While there are a few complaints about QuickBooks Online’s mobile apps, most users find the apps incredibly helpful and easy to use. The apps receive 4.2/5 stars on iTunes and 4.3/5 stars on Google Play Store.
One of the biggest complaints about Xero is that their mobile apps are lacking key features and are ridden with bugs and crashes. It’s easy to see the winner in this section.
Customer Service & Support
Xero has the best customer service by far. In my experience, Xero representatives are well-informed and quick to respond to customers. The company also offers ample online resources, including a comprehensive help center, an in-software help button, a community forum, and lots of business and accounting guides.
While QuickBooks Online has been attempting to remedy their issues with poor customer support, the company still has a long way to go. Response times are slow and representatives are often uninformed. On the plus side, QuickBooks Online does provide a contact phone number (Xero does not — a fact quite a few users have complained about), but the phone support is not enough to beat out Xero.
Negative Reviews & Complaints
Winner: QuickBooks Online
This is one category QuickBooks Online should not want to win, and yet here they are. QuickBooks Online has received many user complaints regarding poor customer service, bugs, limited mobile apps, and even unauthorized charges.
Xero, on the other hand, has received very few customer complaints (although, this could be because it has half as many users as QuickBooks Online and hasn’t been around as long). The software is well-loved by most of its users and receives higher ratings across popular customer reviews sites.
Positive Reviews & Testimonials
While QuickBooks Online gets more positive reviews in terms of numbers, Xero receives a higher percentage of positive to negative reviews, which is why we’ve given it the victory in this section. Xero has earned 4.4/5 stars on GetApp and 4.3/5 stars on G2crowd (on this same site, QuickBooks Online only receives 3.1/5 stars).
Xero has over 500 integrations, while QuickBooks Online comes in with over 400 integrations. Xero outnumbers QuickBooks Online here, but let’s be honest: once a company hits the couple hundred integrations mark, what more could you ask for? Both of these companies are the top accounting software companies when it comes to integrations, so you can’t go wrong with either choice.
Ordinarily, this section results in a tie, but Xero has set itself apart in terms of security.
Both QuickBooks Online and Xero use data encryption, redundancy, and physical security measures at their prospective data centers. However, Xero boasts an unheard-of 99.97% uptime and has one of the strongest security reputations in the cloud accounting world. Of course, QuickBooks has one of the other strongest reputations in the accounting world, so, again, you really can’t go wrong with either option in this regard.
And The Overall Winner Is…
QuickBooks Online put up a very good fight, but in the end, Xero edges out the competition in a few key areas. Xero offers accessible features, better customer service, and more positive reviews. In this comparison, the people truly have spoken, and Xero is the winner.
Xero the Best Accounting Software For Larger Businesses. If you are looking for strong accounting capabilities, Xero won’t let you down. It’s important to note that there is a steep learning curve with this software, so if you’re not up for the challenge, QuickBooks Online might be a better choice.
Although QuickBooks Online didn’t win this one, it is particularly ideal for small businesses. If your company relies on invoicing, QuickBooks Online’s invoicing capabilities are far beyond anything Xero can offer. And if you need a project management feature, QuickBooks Online is also the way to go. Who knows?
If you want a full guide in how to set Xero up- go to our of our new chatbot 🤖, Claire
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