What should you think about before you start?
Let’s start with the structure first.
A Limited Company is easy and cheap to form online in 24 hours but some recent changes have now happened:
1. One Director must be UK resident.
2. Proof of ID will now be asked for. This is new
3. You will have to provide a SIC (Standard Industrial Classification) what your company does
4. Think about share structure, who owns how many shares and what classes
5. Registered office, if you don’t want to use your home address (done online and not expensive). This can also give you a prestigious post code if that’s what you are after.
When selecting your bank, talk to various ones about the nature of your business before you start, make sure the are used to Crypto and understand it, if not they may get concerned about the large movements in funds and file a Suspicious Activity Report. This can result in your account being frozen and them not returning your calls until they have clearance. Suspicious Activity Reports - National Crime Agency
Always open an account in the companies name, don’t attempt to use your private account and hope for the best, it won’t happen. The downsides are that you will be treated as having taken all the profits before tax and will have potential tax and associated penalties to go with it. It also defeats the object of using a Limited Liability Company.
What are your responsibilities as a Director?
1. To act within powers in accordance with the company’s constitution and to use those powers only for the purposes for which they were conferred
2. To promote the success of the company for the benefit of its members
3. To exercise independent judgement
4. To exercise reasonable care, skill and diligence
5. To avoid conflicts of interest
6. Not to accept benefits from third parties
7. To declare an interest in a proposed transaction or arrangement
8. To file accounts annually along with a tax return and confirmation statement.
9. To maintain accurate accounting records.
Now for the tax:
If your company is trading Crypto Assets then it will be liable to Corporation Tax on all realised gains. Unlike an individual there is no distinction between Capital Gains and Income, everything is charged at one rate. 19% up to £50,000, over £250,000 at 25%, in between there is a sliding scale. There are various costs that can be offset such as investment in fixed assets, computers, office furniture etc. Discuss these first with you accountant. Losses can be offset against profits, so you can carry them back for 12 months or carry them forward against future earnings. (you need to have paid tax to claim it back.)
How do you get you profits out?
Normally this is via a mix of salary and dividends. Dividends are payable out of distributable reserves, (profits after tax and losses brought forward).
The above is a rough guide, so if you would like to know more email or call to arrange an e-meeting.