Benefits of a limited company – setting up your own company
Setting up your own limited company can be the most tax efficient way to get paid as a contractor. This is the key motivation many contractors choose this option and it could also be the right move for you.
There are many other limited company benefits that could suit your working circumstances, career goals and lifestyle. Read more to find out if a limited company is ideal for you.
Limited company benefits
These are some of the top advantages of limited companies, and why the number of single employee limited companies has increased by over 70,000 in the last year:
- Tax efficiency and planning options
- Claim expenses
- Option to reclaim VAT on certain purchases
- Minimised personal liability
- Legal identity separate from the owner
- Credibility, trust and professionalism
- Increased opportunity for investment and lending
- Flexibility – maintain your own company through various contract roles
- Have your own personal brand
- Greater control over your finances
- Save tax with limited company pension contributions
- Scalability – having the foundation for growing a business
Of the limited company benefits above, contractors cite tax efficiency and security (minimised liability) as two of the most important factors when they consider how they will be paid as a contractor.
Contracting through a limited company offers more security than a sole proprietorship, and offers a higher take-home pay than working through a limited company.
Try our limited company contractor calculator to find out your potential take-home pay through a limited company.
Is a limited company right for me?
Setting up your own company as a contractor may be right for you if:
- You expect to contract for the long term, for at least 6 months or more
- You are happy to complete some of your own admin in order to increase your take-home pay (but don’t worry, there are accountancy options that can handle most of the admin for you if you wish)
- You want to have greater control and autonomy over your own finances and taxes
- You earn or will earn more than £500 per week or £25,000 per year
The best way to realise these limited company benefits is by using an online accountancy provider, with the support of an accounting software, to make contracting with a limited company easy and stress-free.
Despite the various benefits of running your own company, it can be a daunting prospect, and in some cases, you may be better suited to working through an umbrella company.
Start your limited company
From just £95 +VAT per month, you can have your own company set up within 24 hours and registered for taxes, and a business bank account set up. You will also get access to FreeAgent award-winning online accounting software to help you run your accounts, along with full support from a real live person. Our package will provide you with the perfect modern accountancy service.
Why online accounting?
Online accounting allows you to focus on your contract work without having to pop into your accountant’s on the high street. Plus, you have peace of mind knowing you are using the same cutting-edge software as tens of thousands of professionals in the UK – whilst still having the accountancy support you require from a live person.
Using an online accountancy provider is perfect for you if you’re an experienced contractor, are technologically savvy and have access to a computer or tablet.
Nonetheless, we can talk you through how it all works and ensure you are set up for success. Online accountancy is the 21st century way of contracting and the software and support you receive is designed with ease of use in mind.