When you form a company you just want to get on with it. Most people dream of running their own business and find that official aspects of administration and filing within a company confusing, or at least irritating. There are so many terms and phrases involved and that’s why it can be sometimes frustrating for people.
Getting to grips with all the official terminology that comes with running a company is a necessary part of owning a business. Here we will look at many of the more common terms and provide easy to understand explanations – so you can cut through the jargon and focus on running the business.
The terms that are used for various business activities can be quite a challenge to grasp. So let’s bust a bit of the jargon out of them – this way when you form your company with us you know exactly what they mean.
Company formation terminology explained…
The following is a list of terms you will come across, along with a simple to understand explanation. You can refer to this if you have any questions or forget exactly what a term means.
Accounting Reference Date: This is the period of time that your annual accounts must cover. It is usually a 1 year span.
Annual Accounts: These are the financial filings you make each year that are sent to Companies House. This is not a tax return, which is sent to HMRC, but more of a summary of your company financials.
Companies House: This is the UK registrar of companies. Essentially it is the place where all records are housed and it is the governing body for company registrations.
Company Dissolution: When you close a company it is known as ‘company dissolution,’ this is basically the process of shutting your company down.
Corporation Tax: This is the tax on your profits in a limited company, paid to HMRC.
Directors: These are the people responsible for running a company, or multiple companies. Directors are appointed, normally during formation, and can be changed or added to.
Dormant Company Accounts – The type of annual accounts your file when your company is dormant and not trading. This is not applicable unless you’ve not been trading.
HMRC – Her Majesty’s Revenue & Customs – The you place you pay your tax, and file a return each year.
Made Up To Date: The date that your annual accounts or annual returns are correct up to.
Registered office: This is essentially your ‘official’ address. It may be your home address or you can use a registered office address such as ours. It can be any UK address that you have permission to use.
Return of allotment of shares – This is the document (the ‘return’) you fill out when adding new shares to a company.
SAIL (Single Alternative Inspection Location) Address: This is an address that is used to provide Companies House with the address when records are kept at a different address than the registered office.
Secretary: This is an official post within a company, it does not involve secretary work in the traditional sense. Company secretaries are responsible for the governance and structure of the company. These are an optional appointment.
Service Address: This is the publicly recorded address for each director of a company. If you don’t want to use your home address you can use a mail forwarding address.
Share Capital: This is the equity of the business, it is the value of all the shares issued in a company.
Shareholder: This is a person who owns shares issued by the company.
Share: The company is divided into units called shares and allocated to shareholders.
SIC (Standard Industrial Classification) Code: This is a code used for classifying the category of the business.
WebFiling Authentication Code: This is the code you need to file company related tasks online.
Company Formation Terminology Explained
There is a lot of terminology thrown about when forming a company, and it’s not something you will necessarily come in contact with too much in terms of your day-to-day business activities – which can mean there’s a bit of a learning curve at first.
But hopefully this keeps all the jargon officially busted and has a good effect, so that when you form your company with us you have a much better idea of what’s going on.