Advantages and Disadvantages of Contracting

(2 minutes to read)

There are many reasons contractors choose to operate through a Limited company – however, it’s not for everyone. Before you take the plunge, you’ll want to be sure you’re making the right decision for your own personal circumstances. This guide will help you decide if a Limited company is the best option for you.

Advantages of Contracting

1. Higher take-home pay. Everybody wants to take home more of their hard-earned pay, while staying on the right side of HMRC. A Limited company offers greater opportunity for intelligent tax planning than self-employment or an umbrella company.

2. Tax relief on business expenses. Any costs incurred solely in the running of your business can be claimed back as expenses, allowing you to offset the necessary costs of contracting. You can find out more in our Expenses Guide.

3. Greater opportunity for tax planning. In addition to expenses, you may benefit from the flat rate VAT scheme, and you can plan how and when to draw income from the Limited company in the most tax-efficient manner.

4. Total control of your business and name. You have complete control of your own financial affairs. Once incorporated, the name of your company is protected – even if you’re not currently contracting.

5. One company for all your business interests. Any business you undertake can be done under your Limited company banner. This presents a more professional image, and gives you more credibility in the eyes of your suppliers and customers.

6. Limited liability and protection of personal assets. In the event that a business fails, you cannot be held liable for the debts of a limited company and your personal assets are not at risk.

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Yes I do

Disadvantages of Contracting

1. Unsuitable for short-term or lower-income contracts. As a general rule, a Limited company is not the best option for those contracting short-term or earning less than £25,000 per year. In some circumstances it can still be beneficial – it’s worth contacting an accountant for more information.

2. Additional administration. Although a quality contractor accountant will take the majority of the administrative burden away from you, you’ll need to keep track of your finances, expenses and outgoings. This is usually no more than 30 minutes per month.

3. Yearly accounts. You’ll need to file your company accounts yearly, including personal and corporation tax returns. Again, your accountant will handle the majority of this for you, but you’ll need to be organised to provide them with the information they need.

To find out more, please call us on 01442 795 100 or email sophie.lewis@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, ContractorUmbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of ContractorUmbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, ContractorUmbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use CashPlus free of charge for the first year, saving you £69.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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