For any new contractor or freelancer creating and running a limited company may seem like a difficult and daunting task but like most most things in the finance industry once you understand how things work the process can be extremely easy.
It’s important that you are well organised and if you require professional advice seek this early. There are many professional bodies and websites that can help clear up any questions you may have. These include;
- PCG – professional Association for Freelancers and Contractors
- Guide on choosing a legal structure for a business
- Setting up a Limited Company from HMRC
Another good source of information is fellow contractors because if you have these questions then chances are they have gone through the same process and have valuable answers and recommendations .
Many new contractors think that by going down the limited company route it is going to be a lot more expensive, this isn’t alway the case but it’s easy to understand why some people think this with the setup costs and accountancy fees.
I’d suggest everyone read the following information from HMRC as it explains a the process of satrting a new limited company, if you understanding what is required it is easy to find cheaper or faster solutions.
In a recent video interview I interview Paul Rawlings from Nimbus Accounting about what are the benefits are to using a Limited Company compared to a Umbrella Company. He also shared some great information about how to be more effective when it comes to paperwork.
Download the podcast View the interview
5 Tips when starting a Limited Company
- Make sure your company name is available. You can do a search at companies house to make sure no one has this name. If you’re going to actively trade and market under this name it would be a good idea to make sure that the domain name is available and there are no trademarks on this name. I would also recommend making sure that you secure social media profiles for this name you never know what will happen in the future
- I try to avoid filling out forms whenever possible and HMRC don’t make it easy in regards to telling you which forms they need filled out. So by using a formation agent or getting your accountant to do it you save a lot of time and effort for a small fee. Most formation agents will only charge around £25 to do it all for.
- For the majority of contractors and freelancers a business plan is not necessary so don’t waste your time in doing one. Many banks still asked to see a one when setting up business accounts but just explained to them the nature of your business and what the limited companies is used for and they should move on from this question.
If possible use your accountants or a PO Box as the companies registered office as all your businesses information which Companies House hold is freely available and the amount of promotional material you receive generally increases when you become a director and limited company. There have been situations where people have opened credit accounts from using the details in companies house.
The post Using a Limited Company when you’re a contractor appeared first on UK Contracting.