Office of National Statistics figures suggest that there are nearly 2 million contractors, freelancers, and self-employed professionals in the UK. When providing their services, contractors generally select one of two legal structures to carry out business – as a limited company or by joining an umbrella company.
A contractor limited company is a separate legal identity to its directors and any other person who holds shares in that business. If a director or shareholder resigns, dies, or is made bankrupt, that is a personal matter to the director or shareholder – the company will still continue to exist.
A contractor limited company has its own bank account, can take on debt, sign contracts, make profits, and make losses. Contractor limited companies have a separate taxation system to individuals.
The money in a limited company bank account belongs to the limited company – the money does not belong to the shareholders or directors.
Shareholders are not personally liable for any debts the company owes or contracts of service the company signs. Contractor limited companies offer shareholders “limited liability” meaning that, should a company become insolvent, shareholders are liable to pay to the company what they paid to own the shares. Any funds remaining following dissolution will then be distributed to the company’s creditors.
Each contractor limited company has its own internal rule book called the Articles of Association that it must follow as well as the requirements contained in the Companies Act 2006.
Compared to contracting under an umbrella company, there are far more rules that a limited company and its shareholders must follow. However, limited company contractors using an online bookkeeping system and working with the right accounting firm offers significant tax advantages as well as affording a contractor much more freedom over their clients and careers.
In this post we cover everything you need to know when appointing an accountant for your Limited company. Appointing an accountant can be a very important part of the process as can Appointing your accountant with HMRC as your “agent”.
Directors of contractor limited companies must be aware of their responsibilities to HMRC and Companies House. In this guide, we cover everything from what is IR35, a Director's role and also Contractor VAT.
It is important to know about the broad range of limited company contractor expenses that can be claimed back. This section covers Capital allowances for contractors, types of expenses you can claim back and Contractor expenses when working away from home.
Bookkeeping software is essential for providing estimates to clients, invoicing, chasing payment, accepting payment, receipt storage, and more. We look at the importance of keeping money aside for tax and slower trading periods, how to separate personal and business finances and keeping business records safe & accessible for inspection by HMRC.
There is a wide variety of ways in which a contractor limited company can market itself including a well-written CV, using a recruitment agency, online job boards, LinkedIn, networking, websites, and email marketing. Marketing gets a contractor in to see an interviewer who will eventually award the job. We look at the mindset of an interviewer, phone interviews, what’s expected at face-to-face interviews, and the increasing frequency of Skype interviews.
Contractor interviews are one of the most important aspects to winning business as a contractor. This resource will inform you for what you need to know about The mind-set of the interviewer, phone and face to face interviews and Skype interviews for contractors.
Insurance is a necessary business expense for contractor limited companies providing protection against a variety of different threats to the business. We discuss employer’s liability insurance, and director’s liability insurance. Also included are if contractor income security insurance and contractor personal accident insurance policies offer value for money.
A contractor limited company pays its own taxes including corporation tax, Employer National Insurance, IS and VAT. There are schemes available from HMRC which allow contractors extra time to pay what they owe when money is tight. In this post we look at the tax burden faced by contractor limited companies.
Contractor limited company directors are required by law to complete a Self Assessment every year. In this post, we look at how to register and when the self assessment submission needs to be made by. We also examine tax bands for contractors, income tax, National Insurance and dividends.
Directors of contractor limited companies have multiple opportunities to efficiently structure how they pay tax. In this post, we consider salary and dividend splits, appointing family members, claiming back expenses from previous years, capital expenditure allowances, tax free savings accounts, special investment schemes, single premium investment bonds, and Members’ Voluntary Liquidations.
