So you’ve decided you’re going to give it a go as a contractor and you want to set up as a Limited Company- that’s great. If you think you’ll be contracting for a while, and you’ll be earning over £140 a day, then this is the best business model for you.
Running your own Limited Company doesn’t come without its responsibilities, though, and there are a few things to think about when setting up and running your own business.
Many contractors choose to have an accountant take care of things for them, to help reduce admin and ensure they remain compliant. Before you do anything, you may wish to do some research into a suitable contractor accountant who can help you get started, but here’s how it all works and what you need to do next.
Register at Companies House
You’ll first need to register your new Limited Company at Companies House, which can be done online for as little as £12 or around £40 by postal application. In doing this, your details will be available publicly to view on Companies House, and you’ll be listed as the director of your company. It is important to note that if you put your home address as your business address, this will be available to access by the public online.
However, when you choose to set up with a contracting accountant, they can often set up your Limited Company free of charge, and they can also put their office as the registered address ( a good account will also offer this free of charge – be sure to ask when shopping around). This is preferable for most as it keeps your personal details off the public domain and it means all correspondence from HMRC will go directly to your contractor accountant.
Keep track of your expenses
Once you’re all set up and ready to start contracting, you’ll then have to start keeping track of all your ingoings and outgoings. Setting up a business bank account is advised, as this keeps everything in one place making it far easier to monitor.
Make sure you keep all receipts, and have them logged somewhere. You can choose which way you prefer to do this, but keeping a record of everything electronically keeps it all tidy, and provides back up should you lose your paper receipts (HMRC will accept electronic copies/scans).
An accountant can do most of the hard work for you, you just have to forward on all receipts and records of your ingoings/outgoings. Here at Intouch Accounting, we have our very own cloud-based portal that our clients have 24/7 access to, which makes it easy to upload records as and when you need to.
Ensure all tax returns are filed and paid on time
As the director of your Limited Company, you are responsible for ensuring all the required paperwork such as tax returns and end of year accounts are filed within their deadlines. It’s also important to be mindful of your end of year tax bill, so it’s advised to put aside some money each month for when your bill is due, so that it doesn’t come as such a shock – especially in your first year as a contractor.
Your contracting accountant will be able to notify you and keep you informed of any important upcoming dates, and they’ll also be able to file your tax return for you. The last thing you want to be doing is spending time sorting through your year’s accounts, and this way, you’ll know that everything has been filed correctly. All you have to do is pay your bill.
Choosing the right contractor accountant
Making sure you have a reliable and knowledgeable contractor accountant is so important when starting your Limited Company, and it will make your life so much easier.
Shop around and ask questions so you know exactly what your fee covers and whether there are any additional costs for set up, end of year tax returns, and contract reviews. Even if you don’t think you’ll be affected by IR35, it’s good to know your accountant has got you in safe hands and to check whether they include specialist advice within their services.
When you first start out, you’ll want to put all your attention into finding your first contract, and you may be thinking you don’t want to set up with an accountant until you secure that first bit of work. That’s absolutely fine, and here at Intouch Accounting we understand you won’t want to commit to anything until actually working. We are happy to provide you with advice in advance of signing up with us, so you’ll know exactly where you stand and what we can offer you. We’ll also set up your Limited Company free of charge when you’re ready.
If you’d like to learn more about our contractor accounting services, contact one of our expert advisors today.