Dear client, considering that you are going to make the investment yourself, it is advisable to incorporate a limited liability company as this way you can protect your personal assets.
To incorporate a limited liability company you need at least one shareholder and one director, who can be the same person. The difference between shareholder and director is very simple:
- The shareholder owns the company, but does not manage it. He receives dividends if the company makes a profit.
- The administrator has the power to manage the company, open bank accounts and conduct business operations.
To create this type of company you must first think of a name, be clear about the services you are going to offer and who will be the director of the company (which can be you without any problem).
To register this type of company you can do everything absolutely online, in fact there are many pages on the internet that offer this service and it is relatively fast and not so expensive. If you wish, I can help you to get one of these services.
As far as taxes are concerned, a limited liability company only pays 19% corporate tax on net profits and generally the directors are not obliged to pay social security.
To determine your profits, you must subtract the business expenses that you can deduct from your income.
As for VAT, the standard rate in the UK is 20%.
As you will be a shareholder, when your company makes a profit, you will be able to earn dividends. In the UK there is no withholding tax on dividends, so you should only pay 19% tax on your annual net profits.
Note that the limited company tax year is not a calendar year. The accounting year begins on the day of incorporation (or the day the business is started) and ends 365 days later. The first tax payment period is 21 months from incorporation.