Forming a company is the best option for running a business effectively and handle the financial affairs.A limited company is a separate legal entity and as such, legally, it’s responsible for its own actions.
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2. What Do You Mean by ‘Setting Up a
Limited Company’
3. What Do You Know About Setting Up a Limited Company
Forming a limited company is an efficient way to manage business and
financial affairs, but you need to make sure that you get the right
structure for your business, which is the essential part.
Are you tired of being baffled by the term ‘limited company’? As a
contractor or freelancer, it is important to know the difference between
working for an umbrella business organization and setting up a ltd
company. Sole traders, contractors, and limited companies are all
different types of business mediums in which people chose to earn an
income through. Choosing the best platform for you is a big decision and
should be done through an independent advisor or a specialist contractor
accountant.
Know Some Basics about Limited Company
A limited company is often shortened to the abbreviation Ltd, and
usually appears after the name of the company. Setting up a limited
company means that the business organization is owned by its
shareholders, or that individual shareholders own a small portion of the
business enterprise. A Ltd company is known as having ‘limited
liability’ structures in place. It means that if the company should fail, the
shareholders of the company are not liable for its debts. When it comes
4. to operating under a limited company, its investors or shareholders can
only lose the money they have invested and no more.
Trading under a limited company means that your personal and
business-related financial activities are kept separate. This requires you
to set up a bank account underneath the limited company’s name. As a
freelancer or contractor, the shareholder is normally simply the
individual freelancer. You can however split the ownership between
different people including family members.
When is Setting Up a Limited Company a Good Idea
Setting up a limited company or choosing to work through an umbrella
business organization is in one of the options you need to consider once
you have made the leap to become self employed. It may make the
difference between becoming a successful contractor with a steady flow
of revenue, or your business goalless. It is always best to talk in person a
specialist contractor accountant as they can assess your individual
circumstances and requirements. Below are a few rough guidelines on
whether an umbrella company or setting up your own limited company,
which is the best option for you.
If you are new to contracting or freelancing then it is best to work
under an umbrella company until you find your feet.
5. If you are an established contractor, already contracting for at least
six months, or planning to contract for the long-term or
indefinitely, then setting up a limited company may be good for
you. You will already have a rough idea of the way in which
freelancing works in regard to paying NICs, tax and claiming
expenses.
Limited companies are more suitable for higher earning contractors
on higher rates of pay. If your earnings start reaching or tipping
over a forty-thousand pounds per annum threshold then setting up
a ltd company is more beneficial.
People who are starting limited companies will have a sound
interest in setting up their own business. A limited corporate
structure looks more professional to customers and clients but a
contractor should be aware of the added responsibility it demands.
Limited enterprises must negotiate the minefield of IR35s, a part of
legislation introduced by HM Revenues & Customs (HMRC).
Does the IR35 apply to your limited company? These are helpful
companies out there who can offer contractors a limited company
service such as a specialist contractor accountant to deal with
complex paperwork for HMRC.
6. Setting up a limited liability company is a sign of independence
but in turn slightly more administration. Completing annual
returns, personal and company tax returns, making payments and
signing various documents will have to be completed. Also,
calculating your own expenses with receipts and bank statements
will require the limited contractor to be more confident with their
administration.
Seeking Professional Assistance in Setting Up a Ltd Company
These days, there are many professional accounting firms such as
Yorkshire Accountancy that specialize in company formation service,
and they have team of experts who are ready to assist people in realizing
their goals and ambitions with their own startup ventures.
7. Contact Us
Address: Suite C, Annie Reed Court, Annie Reed Road, Beverley,
East Yorkshire, HU17 0LF
Website: http://www.yorkshireaccountancy.co.uk/
