Introduction

Information Resource for Contractors, Consultants & Freelancers

Contracting Through Your Own Limited Company

If you've decided to be a contractor and to trade through your own limited company, you will have a few tasks to complete prior to the start of your contract assignment. There will be a few forms to complete and and some tasks to get out of the way.

One of the most important things will be to appoint a specialist contractor limited company accountant. Unless you have a personal recommendation or experience it can be difficult to know how good they are from simply a search on the web.

To help you make this decision we have a unique Top 150 Contractor Limited Company Accountants Chart. It is complied from the feedback of fellow contractors, who vote on their own accountant and covers things like; price, convenience & good old fashioned service. The chart is dynamic - votes from contractors are coming in every day.

How do you contract through a limited company?
In the first instance you need to set-up a limited company. You will also need a business bank account and insurance(s). Your limited company accountant will be able to help you with all this, as well as various other bits of obligatory administration & HMRC forms.

Claiming expenses through your limited company
On a day-to-day basis you may find yourself spending money to keep your limited company going. If this is the case, you can claim this as an expense, and claim it back through your limited company. Here's a list of the things you can claim as expenses.

Paying yourself through your limited company
Unlike an employee who is on a salary, you will pay yourself a mixture of salary & dividends. The precise ratio between the two will depend on your specific circumstances. Your accountant will be able to advise you on the combination best suited to you.

Limited company Corporation Tax
Not only will you pay tax, but so will your limited company. Corporation Tax (CT) is one of the tax liabilities you will face. It's best to be prepared so as not to face any unexpected bills.

General guide to IR35
IR35 is legislation brought out by HMRC to stop contractors acting like 'disguised employees'. Whether you are caught by IR35 or not will affect how much tax you will end up paying. This guide will help you figure out whether you are in or out of IR35.

Professional Indemnity insurance
One of the key insurances you will have to consider is Professional Indemnity. This will cover you in the event your client takes a dislike to your work and decides to take you to court for negligence. It's really important and a 'must have' for contractors.