close menu

Contractor tips: How to start a limited company

by Kobus Van den Bergh | Jan 10, 2017
  • Operating through a limited company is a smart way for contractors to structure their earnings and can be more tax-efficient than self-employment. There are many advantages to forming a limited company, but the process can be tricky. We've put together a quick guide to get you started.
  • Contractor tips - How to start a limited company

    The first steps

    Your limited company name must end with the words “limited” or “Ltd”. The name cannot be the same as any other company registered on the Companies House name index or suggest a connection with government or local authorities.

    Once you have decided on a name, you need to register your company with Companies House. You can do this online or by posting the necessary forms.

    Insurance for limited companies

    It’s a good idea to insure your limited company in case something happens to you, your staff, or a third party that you interact with. There are three main types of insurance you should consider getting to cover your company. They are:

    Corporation Tax

    Every limited company will automatically be registered for corporation tax, which is applicable to any profits that the limited company makes. One the registration has taken place, you will receive a confirmation document from HMRC showing your registration details as well as your corporation tax reference number.

    With a limited company, you can claim and deduct any expenses that are relevant to the business activities. These might include home office expenses, mobile phones, office equipment, and travelling to and from clients. The ability to deduct these expenses helps to save on corporation tax, as it reduces the amount of profit in the business.

    Accounting requirements

    It is important to stay up to date with all your limited company accounting requirements. You will need to ensure that your statutory accounts are completed and filed at the end of each financial year. Your statutory accounts must be sent to shareholders (if relevant), HMRC and Companies House.

    Your accounts need to include:

    • A balance sheet
    • Profit and loss account
    • Disclosure notes
    • A director’s report

    Your accounts must meet the International Financial Reporting Standards and the UK Generally Accepted Accounting Practices.

    We can reduce the hassle and stress of forming a limited company. If you have any questions relating to limited company setup, give us a call on  +44 (0) 20 7759 7553 or get in touch via email.

    • woman-alarm-clock-scream
      Applying for an emergency UK visa in South Africa
      Aug 17, 2017  |  by John Dunn
    • Three friends having breakfast
      Roommates, budget and location: Your guide to finding accommodation in the UK
      Aug 11, 2017  |  by Leanne Shrosbree
    • Group of friends having drinks
      5 ways to meet new people in London
      Aug 07, 2017  |  by Leanne Shrosbree
    • SA and UK flag
      How many South Africans were granted British citizenship last year?
      Aug 03, 2017  |  by 1st Contact
    • Puppy
      No pet left behind: Bring your furry friends with you to the UK
      Jul 28, 2017  |  by Leanne Shrosbree
    • Stoketoberfest
      Stoketoberfest is upon us
      Jul 28, 2017  |  by 1st Contact
    • heart calculator desk cash
      Stay on the right side of HMRC as a contractor
      Jul 24, 2017  |  by Kobus Van den Bergh
    • choosing worker
      How to get a job after you’ve arrived in the UK
      Jul 21, 2017  |  by Leanne Shrosbree
    • happy young couple
      Don’t do the long distance thing, extend your UK spouse visa
      Jul 20, 2017  |  by John Dunn
    • Bulldozer through maze
      How to open a UK bank account as an Australian
      Jul 20, 2017  |  by Sam Hopwood
     
     

    Do you like cookies? We do, read why.