How To Set Up A Contractor Limited Company In 3 Easy Steps
Many people set up in business as a contractor after a long time as an employee in their chosen sector, sometimes after a period as a self-employed consultant or, more unusually, having been self-employed alongside employment. There are many advantages to being a limited company contractor, but there are pitfalls as well and it is essential to get help with setting up the company from the outset. There are some very serious penalties which have to be paid if the company is not set up properly and if the only thing which your chosen contractor accountant saves you is this, they will be more than worth their monthly fee.
Use a Specialist
Your very first step is very easy indeed â€“ find an experienced and fully qualified accountant who specialises in contractor accounts. This is often the fence at which the new business falls â€“ it is not reasonable to expect an accountant who does not have special knowledge of this area to understand all of the ins and outs of contractor legislation, so if you have an accountant already, you may have to consider a change. Ask questions before you take on a new accountancy firm to make sure that they are up to date with all the aspects of company formation in your chosen sector.
The Right Set Up for You?
Your second step is to actually decide whether you need to form a contractor limited company at all. If your business is being set up to deal with a single contract which may only last for a while, or if you are considering this step as a stop-gap between jobs, you might want to consider an umbrella company instead. Your accountant will explain the pros and cons, but essentially an umbrella company means that you will work through it rather than on your own, with all of your expenses and wages being processed by them, although the contract on which you are working is one you have sourced yourself. This is a stage which some contractors go through while they decide whether they want to form their own company, or while they research the availability of the work in their particular sector.
Choose your Name
Choosing the right accountant makes the third step very easy too. You just need to choose your limited company contractor name. If you are fairly creative with words you might choose to make up your own, but it is possible to get one â€˜off the shelfâ€™. You need to make sure that it is something that will be memorable and easy to pronounce and spell. This is not as easy as it sounds as you will also need to consider how it will look as a website address â€“ absolutely vital as this will be an essential marketing tool. Again, your contractor accountant will be able to give you a lot of input. Accountants in this sector are far more than simply someone who deals with the inland revenue on your behalf â€“ they can be the power behind your business set up from company formation to your first million!
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