Company Registration

Got a good idea? Want to become independent? Tired of working nine to five and want to become an entrepreneur? Is your question, how to get started, what form of business you should set up in order to turn your plans into reality?

With our company formation service, we can provide you with the right information on these initial questions and carry out the necessary registration processes.

If you are still not sure of your choice, send us an email or book an appointment and we will help you.

Types of business structures and their tax implications

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Sole trader (self elmpoyed)

Within three months of starting a business, a sole trader must register with the tax office. If this is not done within the time limit mentioned above, a £100 fine will be imposed.

This form of business has two types of tax burden:

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National insurance

Class 2: £3.15/week, currently payable at the time of submitting the tax return
Class 4: an additional 10.25% (9% from 6 November 2022) at the end of the tax year when the tax return is filed, if profits exceed £9881 per annum. This NI is calculated and payable on the part above £9881.

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Income tax

Paid once a year.
Deadline: 31 January of the year following the tax year
(For example: the end of the tax year 2022/2023 is 05 April 2023.
The deadline for paying the tax for this period is 31 January 2024)

The income tax is calculated as follows

Income		amount of tax
0 –	£ 12.570	tax free
£ 12.571 –	£ 50.270	20%
£ 50.271 –	£ 150.000	40%
£ 150.001	and over	45%

An advance tax payment for the current tax year must be made at the same time as the above payment if the tax payable is over £1000.  The tax advance is an amount equal to 50% of the tax paid for the previous tax year. (To use the previous example: tax payable on 31 January 2024 = tax calculated for tax year 2022/2023 + 50% of tax calculated for tax year 2022/2023). 

The other 50 percent of the tax advance must be paid by 31 July of the current tax year (In the example above, the deadline for the second part of the tax advance for the 2023/2024 tax year – the current one – is 31 July 2024).
Financial liability of the self-employed person: the self-employed person is liable for his/her obligations arising from the business with all his/her (personal) assets.
Opening a business bank account is not compulsory but recommended.

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Partnership

A joint venture between two or more sole traders while maintaining their sole trade status (e.g. if the partners are self-employed in a particular activity but wish to carry out a different activity in the joint venture).

Within three months of starting the business, the partnership must be registered with the tax office. If this is not done within the time limit mentioned above, a fine of £100 will be imposed.

Tax charges:
Income tax

Once a year after the profits of the business. Deadline: 31 January of the year following the tax year (e.g. the end of the tax year 2022/2023 is 05 April 2023. The deadline for paying tax for this period is 31 January 2024).
The sole trader is taxed on the profits of the business (it is considered as an income and is taxed as described for the sole trader).
The income tax is calculated as follows:

Income		amount of tax
0 –	£ 12.570	tax free
£ 12.571 –	£ 50270	20%
£ 37.701 –	£ 150.000	40%
£ 150.001	and over	45%

An advance tax payment for the current tax year must be made at the same time as the above payment if the tax payable is over £1000. The tax advance is an amount equal to 50% of the tax paid for the previous tax year. (Continuing with the previous example: the tax payable on 31 January 2024 = tax calculated for tax year 2022/2023 + 50 per cent of the tax calculated for tax year 2022/2023). The other 50% of the tax advance must be paid by 31 July of the current tax year. (In our example above, the deadline for payment of the second part of the tax advance for the tax year 2023/2024 – current – is 31 July 2024.

Financial liability of the partnership: the self-employed person is liable for his/her obligations arising from the business with all his/her (personal) assets.

Opening a business bank account is compulsory.

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Limited Company

The company must be registered with Company House (“Cégbíróság” in Hungary). The appointment of a director is required for registration. No minimum initial capital. One person can form an LTD.

Tax charges:
Income tax:
Corporation tax rate is 19%
Due date is the 9th month after the end of the corporate tax year.
Dividends can be paid out of taxed profits.
Dividend tax rates are currently as follows:

		amount of tax
0 –	£ 1.000	tax free
£ 1.001 –	£ 37.700	8,75%
£ 37.701 –	£ 150.000	33,75%
£ 150.001	and over	39,25%

The company is liable for the obligations arising from the business up to the amount of the assets contributed to the company.

Opening a business bank account is compulsory.

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LLP

An LLP combines the organisational flexibility and tax position offered by a partnership (members, partners are taxable in the country in which they are resident) with the advantages of limited liability. This form of business is possible because the LLP is a legal entity, separate from the members who organise it.

Advantages of an LLP:
• An LLP is a legal entity whose members enjoy the benefits of limited liability.
• Any legal entity – or individual can be a member of the LLP.

The LLP is required to start functioning within one year from the date of incorporation.

Members
An LLP consists of at least two members with equal sharing of responsibilities. The profits of the company are in accordance with the participation of each of its members. Members’ details are public data and are available unless a Nominee service is ordered.
The LLP must have a minimum of two Nominee members (equivalent to the Managing Director and Company Secretary) with the same rights and obligations as any other members of the LLP company.
These appointed members shall have, inter alia, the following responsibilities:
• signing documents
• changes in the membership of the company and their registration
• filing a report summarising the company’s activities with Companies House
• acting for and on behalf of the company, filing annual reports on behalf of the LLP, approving invoices
• both members are liable to the law

Partnership agreement
All members of the LLP must sign a partnership agreement. This is the essential document of the business and should include the following details:
• information on the structure of the business
• the scope of the firm’s activities
• the rights and obligations of the members
• the percentage of members with each member’s participation

This document sets out the relationship of the members of the LLP to each other, but also the relationship between the members and the LLP itself.
The LLP is required to file an annual confirmation statement and annual accounts with Companies House in the same way as an LTD.