How to set up a Limited Company
A Limited Company is Tax Efficient
Setting up a Limited Company is the most tax efficient way of organising your contractor business. We help you with the initial set-up and on-going management of your limited company for a highly competitive set monthly fee with no hidden charges.
On this page, we highlight the legal requirements that need to be met, and summarise all the steps which we can assist you in setting up your company and give you peace of mind that everything has been considered and taken care of for you.
STEP 1 – Appoint and meet with your accountant
We can assist and guide you through the process from start to finish and ensure all points have been considered, from tax planning to take home pay and how to invoice your clients. We believe it’s essential to start with a face-to-face meeting as this allows us to understand your needs and provide the best solution for you. On an ongoing basis, you will have a named individual in the team that will support you and deal specifically with your business; we believe this personal service sets us apart and allows us to serve you in the best possible way.
We charge a competitive fixed monthly fee of £105 and will manage all the administration for you so you can focus on your new contracting business.
Please contact us today for a complimentary no obligation meeting to allow us to maximise your tax savings and create the right structure to suit your individual circumstances.
STEP 2 – Open your Limited Company
Before you can start working through your Limited Company, it needs to be set up and registered with Companies House. There are a number of documents that need to be completed and returned to Companies House and we can complete these all on your behalf and have your company set up within a few hours.
As your chosen accountant, we will be able to deal with all correspondence from HMRC and Companies House on your behalf – freeing up your time to focus on your business.
STEP 3 – Open a business bank account
The finances of your Limited Company need to be separate from your own personal funds, so you will need to open a new bank account for the business. We can arrange an immediate appointment for you at our local preferred HSBC branch, where you will be charged a competitive rate or you can choose to set up a business account with your own preferred bank.
STEP 4 – Register for VAT
Once your Limited Company is open it may be beneficial for you to be registered for VAT. There are two options: either the standard way, where you claim back VAT on items that you purchase through your company or through the Flat Rate VAT scheme.
Most contractors opt for the Flat Rate scheme as it makes it easier for small businesses to account for VAT. Essentially you will charge your client VAT at 20% but pay back a lower rate to HMRC – this can be as low as 12% in some sectors (dependant on your industry) and can be a substantial saving.
We can advise you on the best option based on your individual circumstances and your dedicated accountant can apply for VAT registration on your behalf so that you can benefit from these savings
STEP 5 – Register for PAYE
All directors of a Limited Company need to register for PAYE in order to draw a salary from the company. The amount you pay yourself will be determined by your individual circumstances and will be a combination of salary and dividend payments – we can help you set the levels to suit your individual circumstances.
You will need to pay any PAYE or National Insurance Contributions to HMRC each month, administer a monthly payroll and prepare and submit monthly payslips and year-end returns. We can manage this all on your behalf as part of our comprehensive fixed fee service.
STEP 6 – Organise Professional Indemnity Insurance
Before you start any contract, it is advisable to arrange professional indemnity insurance, to protect yourself from any claims of negligence, loss of data or documents or unintentional breaches of intellectual property. The level of PI cover is dependent on your individual circumstances and we can provide introductions; recommend suitable independent advisors and work together with them to make sure you receive the best products and advice for you and your business.
STEP 7 – Invoicing your Clients and Record Keeping
Once you have completed the 6 steps above, you are ready to begin work as a contractor and to start invoicing your clients. As part of the ongoing management of your business, it is essential that accurate records are kept of all invoices and business expenses to ensure that your remuneration, dividend and expense strategy is legal and tax efficient.
We will help you with all of this. As part of the comprehensive TaxAgility service, we include a monthly subscription to OpenBooks to assist you in simply managing your business finances. OpenBooks is an online platform created to help you stay on top of your finances, protect your data, and automate your regular transactions – saving you time each month and ensuring your data is always accurate and up to date.