If you’ve decided to enter the contractor market as a limited company, there are a few steps you will have to follow to make sure you start off successfully. Lucky for you, we’ve put together an easy-to-follow guide to setting up your limited company.
Do your research
Don’t enter this market without doing your research. Know what is needed to keep you afloat and any issues facing the current contractor market.
It’s all in the name
Before you begin, you need to pick a name for your limited company. Your name shouldn’t be directly related to an industry, just in case you decide to expand or change this at a later date.
Divide your shares
Make sure the total number of shares are divided proportionately to the capital, regardless of how many shareholders there are in the company. You must pay Stamp Duty to HMRC on the sale of the shares.
Set up your company
In order to do this, go online at Companies House and complete the set of online forms. You will pay a small fee to do this. Companies House will then check to see if the name you have chosen is available to use, and then you will have to appoint a company director and a company secretary. One person can take on both roles.
Memorandum of Association
A Memorandum of Association is a document that explains why you’ve set up your limited company, and your overall plans for it. This document is extremely important, particularly if any legal issues arise in the future.
Hire an accountant
Set up a business bank account
Again, this is an extremely important step and is not always easier than you think. A high street bank might not be your best bet. Seek advice from fellow consultants or a specialist accountant.
Register for VAT
You will need to apply for VAT registration. This is an essential step, not to be missed. You can register online at HMRC and some accountants will even handle this area for you.
Start as you mean to go on by calculating and keeping track of your start-up expenses.
A few things to note:
- The limited company’s annual accounts must be filed at Companies House
- All profits and taxable income must be declared with HMRC on an annual basis
- A Confirmation Statement must be submitted to Companies House annually
- You must complete an annual Corporation Tax return
- All employees must pay income tax and National Insurance Contributions on any income received.
Check out our guide on the basics to being a contractor, here. If you’re looking for work in the Cyber Security, Business Intelligence & Data Warehousing, Business Transformation, Big Data and Public Sector industries, please contact Cyberteam by emailing firstname.lastname@example.org or call us at our offices in London (+44 (0)207 849 3082) or Leeds (+44 (0)113 398 4070).