Working through a Limited Company can be financially rewarding for Contractors, as the take home pay can typically be higher, compared to working in a permanent position. The Contractor can appoint themselves as a Shareholder and/or Director of the company, which means having complete control over their financial and business affairs.
A Limited Company is:
- a separate legal entity from the directors who run it
- money in the company bank account remains for business, not individual
- can keep any profits it makes after paying tax
- one of the most popular trading options for contractors and freelancers
A Limited Company can be formed in a few simple steps; choose a name, register your company, inform HMRC, open a business bank account and finally, find an accountant.
At Gorilla Accounting, we offer a Limited Company formation for only £50 + VAT, or as part of our all-inclusive package, at a competitive price at just £85 + VAT per month.
As the Limited Company is a separate legal entity, the personal assets of the directors and shareholders are protected. So, if the company is sued, the directors and shareholders will not be required to sell their own assets to pay off the company’s debt.
There are terms and conditions attached to this, for example, if any of the managers are guilty of wrongdoing, their assets could be seized.
Paying yourself
There are three ways to pay yourself out of a Limited Company; Dividends, Salary, Expenses, and Pension Contributions.
Claiming Expenses
As a Limited Company Contractor, you will be able to claim back a wide range of business expenses, this includes; accountancy fees, specialist equipment, travel and business phone. For more information on the types of expenses you can claim, read our ‘Understanding Contractor Expenses’ blog for more information.
Flat Rate VAT Scheme
Your Limited Company may qualify for the Flat Rate Vat Scheme, this is a government incentive scheme that allows you to charge 20% VAT on invoices, but pay back HMRC at a reduced rate. To qualify for the Flat Rate VAT scheme, your VAT turnover must be £150,000 or less (excluding VAT).
Running your Limited Company
Operating a Limited Company will consist of preparing and filing a set of annual accounts, tax returns, corporation tax return, and personal tax returns for each director.
At Gorilla Accounting, your dedicated accountant will offer unlimited support, ensuring that your accounts are in order, and filed to HMRC, saving you time and cutting the admin and financial hassle.
If you would like to speak to a member of our New Business Team, call us on 0330 024 0406 or email info@gorillaaccounting.com.
