How to set up a new company

While setting up a Limited Company tends to involve more costs and admin than operating as a Sole Trader or under an Umbrella agreement, it also offers a wealth of benefits. Among them are greater tax efficiency, less personal liability and more control over your contracting business and personal finances.

If you’re certain that your skills are in demand and are confident that you can charge your desired day rate for your services, here’s what you need to do to set up your new business:

 

Choose a company name

Here’s the fun part – what do you want to call your company? This is completely down to personal preference; would you rather an abstract name, or an informative one that lets prospects know exactly what you do? Our top tips would be to research online for inspiration, brainstorm ideas and test a few of your favourites on friends and family. Before you get your heart set on anything, check with Companies House that your preferred name is available.

 

Incorporate your company

If you’re going it alone, you’ll be responsible for ‘incorporating’ your company, which essentially means registering with Companies House. Along with your company’s name and address, you’ll need:

  • Details of the appointed directors, who’ll control the business (this is likely to be you but may also include a partner/spouse).
  • Details of the company’s shares – for instance, you may have decided on shared ownership with a partner/spouse. If so, they’ll need to agree to forming the company and the written rules, called the ‘memorandum and articles of association.’
  • To check what your SIC code is, which identifies the nature of your business.
  • To establish a company bank account, register for VAT and set up a payroll scheme.

 

Pulling together all the required information can be slightly daunting; also, how you set up your company can affect how tax efficient you are further down the line. This is why you should consider seeking advice from a professional at Intouch, who will also help to ensure that you’re clued up about IR35 tax legislation. Do this and you’ll also have much more time available to channel into the next, important task…

 

Getting your name out there

With your company created, it’s time to shout about it from the rooftops and get your name out there. Take time to research different marketing and promotional tactics; how are you going to show prospects what you have to offer and encourage them to choose YOU to satisfy their next contract?

 

At Intouch Accounting our Personal Accountants get your new company all set up for free, and work with you to help you make the right business decisions and work in the most tax efficient way. We know that taking the first steps into contracting is a big decision, so we’re happy to chat through your questions even if you’re not ready to get going just yet. Get in touch with one of our expert team members today to find out more.

 

Related reads:

Venturing into contracting? Download our free guide now

Calculate your take-home pay and find out if Limited is right for you

Contractor Accountants – do you get what you pay for?

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

 

What does it mean when you have a dormant Limited Company?

Dormant Limited Company

Sometimes Limited Company contractors find that they suspend their contracting activities and put their companies into a dormant state. But what does this actually mean and how do you go about doing it?

 

Laura Hepworth, Director of Operations at Intouch Accounting, helps contractors to run their Limited Companies. Here, she explores what dormant means and what you need to be aware of.

 

What does ‘dormant state’ mean?

In a nutshell, a dormant state simply means the Limited Company is not currently trading, but that does not mean that the company does not have to prepare accounts. The rules for filing accounts with Companies House and for submitting accounts and a Corporation Tax Return still remain.

 

What types of dormant companies are there?

Those who have never traded – If this applies to you, then you will still be required to submit dormant company accounts (DCAs) to Companies House, to advise them of your dormant company. You can only file a DCA if you have never had any transactions through the company.

 

Those who have traded previously – and are now non trading can become dormant if there are no further transactions. If this applies to you, you will continue to have to submit accounts to Companies House and HMRC, as this will report both the current dormant period and the previously trading period as a comparative. Accounts will then need to be filed each year the company remains dormant.

 

If your company has transactions during the year it is not technically dormant, just non trading.

 

Why do contractors have dormant Limited Companies?

A contractor may no longer be actively contracting but wish to keep their company “active” though in a dormant state because they may plan to return to contracting in the foreseeable future or to keep their company name protected.

 

What should you do if you plan to keep a dormant company?

 

  • Avoid making unnecessary transactions
  • Cancel your VAT registration
  • Cancel your PAYE scheme
  • Inform HMRC that the company is no longer trading
  • Consider any funds that are held in the company and whether a bank account is required. Look for a free banking service to avoids bank charges and if you have deposits then any interest will mean your company is not dormant.

 

Speak to your contractor accountant if you need support and guidance on how to do any of the above.

 

How do you put it into a dormant state?

Always let your contractor accountant know of your plans, as they will be able to take you through what needs doing.

 

What happens when you bring your company out of its dormant state?

Nothing! You can start trading again whenever you wish. Again, it’s advisory to inform your contractor accountant of your plans, as if you have cancelled PAYE/VAT schemes, you will have to restart these. Plus, everything can then be discussed to make sure you can start doing what you do best and the administration is all in place for you.

 

How can Intouch Accounting help?

Our team of Personal Accountants are on hand to guide their clients through every stage of their Limited Company’s life, including any periods of dormant state. If you’re looking for that personal service and tailored expert advice, call our team on 01202 375 562 or email us today.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.