Limited company accountancy for contractors
One of the most tax-efficient ways to operate as a contractor outside IR35 is via your own limited company. Whether you are just starting out or have been operating as a contractor or freelancer for a while, setting up your own limited company could be the most beneficial way for you to work.
With over 25 years of experience, we are one of the most established contractor accountants in the UK, and our excellent reviews are a testament to our commitment to compliance and customer service within our sector.
Keep reading and discover more about what it means to have a limited company and the benefits of contracting via a limited company.
How can we help contractors?
Our accountancy service can be tailored to suit all types of contractors – whether you’re new to contracting or a seasoned professional. Here are some of the services we can assist with:
Why should you consider contracting?
Contracting offers a host of benefits, including:
- As a contractor, you have greater control over your work schedule and the hours or days you work. You can create an outstanding work/life balance that suits your lifestyle.
- You can set your hourly or day rate, which means there is a more significant earning potential when contracting.
- You can quickly grow your business network and gain experience working with a variety of people and different organisations.
- Due to the variety of assignments contracting offers, you can quickly increase your skills base, industry knowledge, and experience as a contractor.
- Companies will often pay more for access to specialised skills for different projects or to access a niche area of expertise.
- Contracting allows you to work in different environments in different industries and specialise and hone your skills in specific areas.
The benefits of a personal service company (PSC)
If you are outside IR35, operating via a Personal Service Company (PSC), or limited company as it is often referred to, is a popular choice for many UK-based contractors due to the financial and professional benefits. There are many advantages to contracting with a limited company, and we’ve outlined a few below.
Tax efficiency and planning
As a contractor, setting up your own limited company is the most tax-efficient way to operate, as directors of limited companies can pay themselves a combination of salary and dividends. There are also plenty of tax planning opportunities that you can tailor to your business and goals and use to legitimately minimise your tax liability.
Claim legitimate business expenses
As long as the expense was incurred wholly and exclusively for the purpose of business, trading through a limited company means you can claim a variety of business expenses. You can deduct the cost of the allowable expense to reduce your taxable profit. For more information, please visit the government’s website.
Credibility
Limited companies often have increased credibility and offer customers and suppliers confidence in your business. This largely stems from the fact that incorporated companies have more significant statutory obligations than other ways of operating, have more complex reporting and accounting requirements and are more rigorously monitored.
Limited liability
Limited companies are independent of the directors and shareholders and operate as separate legal entities. This means that if a company becomes insolvent, the limited company is declared bankrupt, not the directors or shareholders. The directors and shareholders are only liable for the value of their unpaid personal guarantees or shares rather than the full extent of the company’s debts and liabilities, which means your personal assets are not at risk.
Protection of your limited company’s name
Once you register your limited company, the company name is protected by law, and no one else is allowed to use it.
Selling your limited company
As a limited company is a separate legal entity, selling your limited company is a straightforward process. If you are the only director or shareholder, you do not need to consult anyone else before selling the company, as you are the only person who will need to approve the transfer of the shares to the new owner.
Shares
You can exercise different share classes to divide the company’s ownership or attract investors. Share options are also beneficial for tax planning.
Appoint an FCSA-accredited accountant today
As a contractor with a limited company, having a good accountant is essential to operating your business efficiently. Churchill Knight & Associates Ltd can provide contractors and freelancers with an FCSA-accredited, informative, proactive accountancy service tailored to your business requirements.
To find out more about our accountancy service or to arrange a consultation to discuss your circumstances, please call 01707 871622 to speak to a Sales Consultant. You can also schedule a consultation for a time that suits you, and a team member will contact you to discuss your accountancy requirements.
Our dedicated self-assessment tax department processes thousands of tax returns for UK taxpayers every year. If you need to submit a self-assessment, contact us today for a competitive quotation or call our friendly sales team on 01707 871622.
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