Contracting through a Limited Company
The finer details of tax planning are what you hire an accountant for – you are not going to be the one sitting down with a calculator, to work out the optimum way to split your income, across your tax allowances. So what does running your own Limited Company actually involve for you?
- Company Formation
The first step in any Limited Company – but you only have to do it once! In practice, this is a hands-off process that is mostly handled by your accountant. Your accountant will incorporate the company and register it for PAYE, Corporation Tax and VAT. You will need to provide identification, a company name and a UK registered address. You will also need to set up a business bank account – more on that here.
Invoicing your agency or client
Once you have taken on a contract, you will need to remember to invoice your client in order to get paid. Your invoice will need to contain your company name, company details, VAT number, invoice date, client name and details of the products/services you have provided. You can create an invoice template to speed this process up. Invoicing is generally either weekly or monthly, as agreed with the client. If you use business management software like FreeAgent – provided free to all Dolan Accountancy clients – then you can handle this online with just a few clicks.
Keep track of your business expenses
You should keep a record of all allowable business expenses, including receipts and supporting evidence. It is helpful to keep all business spending on your business bank card – this makes reconciling expenses far easier. If you use bookkeeping software, make sure to log your expenses at least once a month – you will save yourself a major headache at the end of each VAT quarter and your accountant will thank you too! For more information on allowable expenses, check out our detailed contractor expenses guide.
Decide how and when you’d like to be paid
Drawing money from a Limited Company needs to be done with a little care, to ensure you are taking it in the most tax efficient manner. Speak to your accountant to decide the salary you would like to take and when you would like to take dividends. You will often agree this at the start of the company’s lifetime and pay yourself without much additional input, but if you ever need to draw additional money or set more aside, just give your accountant a call.
Provide any required information to your accountant by the deadlines
Your business is required to submit annual accounts and quarterly VAT returns. Your accountant will take care of these for you, but they will need information to do so. Ensuring that everything is up-to-date will ensure you don’t miss any deadlines or incur late penalties and will also make your accountant’s life easier – which we are all for!
As you can see, the day-to-day running of a Limited Company isn’t particular stressful – that is the value of a contractor accountant! The administration is only a challenge if you let it pile up, so if you take twenty minutes a month to keep on top of everything, you will find it a breeze and take home more than you would though an Umbrella Company.
A good accountant is worth their weight in gold. For more information on contracting, or to set up a Limited Company with Dolan Accountancy, give one of our specialist contractor accountants a call on 01442 795 100 or email firstname.lastname@example.org.
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 email@example.com or firstname.lastname@example.org.