Starting up Checklist

(4 minutes to read)

Running your own limited company is the most tax efficient way to earn as a contractor. Starting up isn’t as difficult as you might expect, either, you just need to have a company name, register your business and set up a company bank account and you will be up and running.

For many people, they may start out as a freelancer or umbrella company contractor and then realise that they want to go onto bigger things by setting up their own limited company.

Limited Company Pros

A limited company contractor will be able to take advantage of more tax benefits compared to others, which is why this is the most tax efficient way of working.

Other pros include:

  • Being able to claim back a much wider range of expenses, as long as they are wholly and exclusively for the running of your business.
  • You will have more tax benefits, such as the Flat Rate scheme.
  • You will have complete control.
  • Your business will be seen as being completely separate to you with it’s own identity and bank account. This means that there isn’t as much risk as some people may think, as should your business face any genuine financial difficulty, you won’t be at risk of losing your personal possessions and assets.

Of course, with most things in life, there are some cons to being self-employed – for example, there will be a certain amount of paperwork involved, you will need to have some understanding of basic tax (although this can be easy to work through with an accountant) and there is a higher level of responsibility, compared to not only permanent workers, but other types of contractors too.

Where do I start?

So, you know what running a limited company involves and have made the exciting decision to go for it, what next?

Naming your company

It is important to come up with a name that sounds not only professional, but is related to your skill set or industry so that it’s easier for people to know what services you are offering (unless of course you plan to expand on the type of work you offer).

Other points to consider:

  • Making sure the name isn’t already taken by another business (you can check this using the Companies House website)
  • The majority of private limited companies must end in either ‘Limited’ or ‘Ltd’.
  • The name cannot be offensive, have a ‘sensitive’ word or expression and it cannot suggest a connection with government or local authorities.

Directors, company secretary, shares and shareholders

A company must have at least one director and they will be legally responsible for running the company, making sure company accounts and reports are properly prepared and the company’s money is used wisely.

A company secretary is often there to help with some of the director’s responsibilities; however, you don’t have to appoint one.

You will have to have at least one shareholder within the company (who can also be a director) and if there is just the one, they will own 100% of the company.

There is no maximum number of shareholders and the price of an individual share can be any value, but each person will need to be paid their shares in full if the company has to shut down.

Register your company

Once you have come up with a name and decided on directors, shareholders etc. you will need to register your business with Companies House.

This comes with a small fee and could take around 48 hours to set up. You will also need to have the following information at hand to complete registering your company:

  • The company’s name and address
  • The names and addresses of directors, company secretary and shareholders.

When you register, you will need to arrange:

  • A ‘memorandum of association’, which is a legal statement signed by all initial shareholders agreeing to form the company.
  • An ‘articles of association’, which is a set of written rules about running the company agreed by the shareholders, directors and the company secretary.

Still have questions about contracting?

Download the guide

Register for Corporation Tax

Within three months of running your business (from when you start buying, selling, advertising, renting a property or employing someone), you will need to register for Corporation Tax. Leave it any later than this and you could face a fine.

In order to register you will need your company’s 10-digit UTR (Unique Taxpayer Reference) and you will be asked for your company’s registration number, the date you started to do any sort of business and the date your annual accounts are made up to.

Hire an accountant

An accountant really can be a great asset when it comes to running your own limited company, as they are able to offer guidance, as well as being able to save you money in the long run with the right advice.

There is also the fact that an accountant will be able to help with the process of setting up your company – some may even offer this service for free as part of a package.

Claim back on start up expenses

As a limited company contractor, one of the main advantages you will find is being able to claim back on costs that are made for the running of your business.

Many contractors might not be aware that it is also possible to claim back on pre-incorporation expenses, that you may have incurred when starting up your business.

Examples of the types of start up expenses you can claim back includes:

  • Accountancy fees
  • Insurance
  • Legal fees
  • Computer equipment
  • Website fees

Are you ready to make the move to contracting? Please call Sophie 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, Contractor Umbrella, 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 Contractor Umbrella – 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, Contractor Umbrella.
  • 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 Tide free of charge for the first year.
  • 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.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

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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