Setting Up a Limited Company as a Sustainability Consultant

Limited Company vs Umbrella Company

Once you’ve decided to become a freelance sustainability consultant, you’ll need to choose a company structure.

The best way to go about this is to look at what each route offers; then you can work out which one better suits your lifestyle and career path.

Here, we compare limited and umbrella company contracting:

Visit our Choosing a Company Structure page for more detailed information on the different types of self-employment.

Why Sustainability Consultants Choose the Limited Company Route

• Your business is seen as a completely separate entity from you with its own identity and bank account – this means that should your business face financial difficulties, you wouldn’t be at risk of losing your personal possessions and assets.
• You’ll have more tax benefits.
• You can claim back on a much wider range of expenses.
• You will have complete control over the direction of your business and career.

Tax Benefits for Sustainability Consultants

Running your own sustainability consultant limited company is the most tax-efficient self-employment route.

Here’s why:

Salary and Dividends

By paying yourself a set salary each month, you not only have a stable income at a fixed amount, but it can also be offset against your company profits, helping to reduce your Corporation Tax liability.

Most directors will pay themselves up to the National Insurance threshold (so they take home more of their pay) and above the lower earnings limit (so earnings still count as a qualifying year toward the State Pension).

They’ll then top their earnings up with dividends from the company, as dividends do not attract National Insurance (NI), making take home pay much more tax efficient.

Corporation Tax

You’ll need to pay Corporation Tax on money made from trading profits, investments and selling assets.

You may be able to claim allowances and reliefs to reduce your tax bill, for example, you can claim capital allowance if you buy assets that you keep to use in your business, e.g. equipment, machinery, business vehicles.

Claiming expenses

Being able to claim back business expenses is one of the top financial benefits of contracting, as it reduces both your Income Tax and NI liabilities, lowering your tax bill at the end of each year.

Every expense must be for business purposes only, and you’ll need to keep records of all purchases.

Here are a few examples of allowable expenses:

• Business equipment
• Phone and internet costs
• Travel and subsistence
• Training costs related to your current line of work
• Pre-trading costs
• Insurance
• Accountancy fees

Take a look at our Limited Company Expenses Guide for more information on this.

How to Set Up a Limited Company

Pick a company name

There are some rules to consider when choosing a business name, all of which are covered in our Naming your Limited Company page.

Choose company roles

A company must have at least one director who will be legally responsible for running the business. For more information on this, take a look at our What Are My Responsibilities as a Limited Company Director? page.

Shareholders

You need to have at least one shareholder in the company, and this person can also be a director.

Register your company

You’ll need to register your company through Companies House – you will need the company’s name and address, as well as the names and addresses of directors, company secretary and shareholders.

You’ll also need a ‘memorandum of association’, which is a legal statement signed by all shareholders or guarantors agreeing to form the company, plus an ‘articles of association’ – these are written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary.

Open a business bank account

Take a look at our Business Bank Account page to find out everything you need to know about this.

Register for Corporation Tax

You can do this through Companies House when registering your company.

Consider registering for VAT

Whether or not you need to register for VAT will depend on your circumstances, which you can read about on our Guide to Registering for VAT.

Business insurance

Insurance is there to protect you from unforeseen situations that could have a detrimental effect on your business and how it carries out its work.

The type of insurance you need will depend on a number of factors, all of which are discussed on our What type of business insurance do I need? page.

Hire an accountant

A good accountant can be a great asset to any business.

While choosing to do your own accounts can seem like a good way to cut costs, if you’re not an accountant or you’re not confident enough to do it all yourself, then it is certainly worth hiring someone to help you out.

How to Choose a Sustainability Consultant Accountant

An accountant will be able to help you keep on top of your financial liabilities and deadlines, as well as provide financial advice that could save you money in the long term.

Just be sure to choose an accountant who:

• Specialises in contractor tax
• Has the right qualifications
• Has a good reputation
• Preferably offers a fixed monthly amount so you know exactly what you’re paying for and avoid any surprise bills!

If you’re looking to set up your own limited company, then take a look at our Become a Client page, which also includes a breakdown of our fixed fee package.

We hope you found this page helpful. If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.