UMBRELLA ACCOUNTANTS IS THE OBVIOUS CHOICE FOR CONTRACTORS WHO WANT TO MAXIMISE THEIR INCOME WITH SIMPLE, LOW COST, FIXED FEE ACCOUNTANCY SOLUTIONS
Benefits of a Limited Company
Working through a limited company has some significant benefits over umbrella contracting and other types of self-employment.
- Limited company contracting can be more tax efficient than working through an umbrella company. Limited company contractors can take a proportion of their take home pay through dividends, which are subject to lower levels of taxation than income.
- The VAT Flat Rate scheme makes life simpler and more tax efficient for some limited company contractors. Get in touch to find out if you can benefit from this scheme.
- Setting up a limited company and finishing your company name with the letters ltd can help project a more professional image of your services. As well as reinforcing your brand, it can also benefit you if you have other business interests or need to employ staff.
- Limited liability means that you cannot be held personally responsible for any company debts if your business fails. One important exception is if you personally guarantee finance for the company.
- You can keep complete control of your financial affairs
- You can grow your business, attract investors and plan your taxes more efficiently by creating different share classes in your limited company.
- Limited companies are legal entities that can be sold or passed on when the time is right.
- When you have finished contracting, then you may be able to benefit from Entrepreneurs’ Relief - a low rate of capital gains tax which is applied to business assets in some circumstances.
Clearly there many advantages to limited company contracting, but this model of working isn’t the best solution in all circumstances. There are some important things that you need to think about before you go down the limited company route.
Important things to consider
- Setting-up and running a limited company comes with new responsibilities and it may not be suitable if you only expect to be contracting for a short time.
- As the business owner and director, you will have overall responsibility for things like your accounts, insurance policies, making payments and chasing unpaid invoices. Although we strive to assist as much as we can, you will bear the ultimate responsibility for ensuring that the business is compliant with expenses rules, IR35 legislation and other relevant company legislation.
- As a limited company contractor, it is likely that you will fall outside the Agency Worker Regulations, meaning that you won’t be guaranteed the same legal protections as other workers in a particular workplace.
- Limited company contractors have to do some extra paperwork. We estimate that a typical contractor will have to put 15-20 minutes aside each week for this kind of administration.
- Limited company contracting may not be suitable for contractors earning less than £35,000 per year.
Emma is definitely an asset to the company and in more than one occasion she has proven to be efficient, prompt and patient in my regards, and I'm sure in anyone else's.