Operating through a limited company can be a cost-effective and tax-efficient way of working, and for contractors and freelancers, can be a highly rewarding format.
Qdos Accounting provides a full service for setting up a limited company as part of our accounting packages, but if you prefer to do it yourself, here’s how.
Operating through a limited company can be a cost-effective and tax-efficient way of working, and for contractors and freelancers, can be a highly rewarding format. The first port of call for all prospective contractors is setting up a company, and most contractors are unaware of the process and steps involved in setting up a limited company.
Here at Qdos Accounting we assist first time and veteran contractors alike in setting up Limited Companies every day and strive to ensure that the process is swift and seamless as well as providing knowledge of how best to get things started.
We have outlined below five key areas to consider when setting up a Ltd Company:
1 – Company Name
You’re going to need a name for your company before you can do anything else. Choosing a name for your company can be as easy as L-T-D, but please note that there are restrictions on what your desired company name can be. It is your first piece of marketing so spend a little time deliberating on your choices, making sure it is easy to remember and understand, particularly over the phone. Companies House has a checking service, so you can check the availability of the name you want before registering. We have published some guidance on choosing the right company name, so if you need any help then hopefully we can be of service.
2 – Company Incorporation
Once you have your name sorted, you can breathe life into it by registering it with Companies House, also known as ‘incorporating’ your company. Once you have registered, you will receive a certificate of incorporation which is the legal proof of your company’s existence as well as supporting documentation.
There are several ways to incorporate a Ltd Company, the three most common we’ve listed below:
- Online via the Companies House website – If you have no questions or concerns about setting up a Ltd Company and want it out of the way before signing onto a contract, an option is to set up your company directly with Companies House via the Web Incorporation Service on the Companies House website.
- By post directly to Companies House – If you’re old school and don’t want to incorporate online, then you can do this via post. You have the option to complete an IN01 Application form along with the Memorandum of Association and an Articles of Association and send all by post.
- Get your Accountant to do it for you! – The easiest, cheapest and most effective way of incorporating a Ltd Company is to have your accountant assist in the process and submit the company on your behalf. Having a trained professional with experience in Ltd Companies is beneficial as you will receive advice and guidance on how best to set up your Ltd Company, taking into consideration your registered office address, the company structure, and how your application is submitted. Here at Qdos Accounting, we include a complete company set up bundle free of charge with all our accountancy packages
3 – Company Address
An important factor to consider when setting up a new Ltd Company is which address to use as your company’s registered office address. The company’s registered office address will act as the main source of correspondence for all your business’ post and will be referenced on most of your business communication. Below we have outlined three common decisions contractors make when choosing their company’s address.
- Use your home address – Many contractors use their home address as their business’ registered office address. Some see it as a way of taking full control of their business and making sure that they are on top of all company correspondence. This isn’t always a popular route however as because a company’s registered office address is public knowledge on Companies House; some are hesitant to publish their home address for the world to see.
- Pay for an external office address – Some contractors spend money on hiring an external registered office address for their business. This is common practice when individuals have used formation companies to set up their businesses online.
- Use your accountant’s address – A cheap and hassle-free way of setting up your business’ registered office address is to use your accountant’s address. By using your accountant as your company’s office address, you can ensure that all your company’s routine correspondence from HMRC and Companies House is picked up and processed seamlessly. At Qdos Accounting we provide a free registered office address service to all of our clients and have published some guidance on the benefits of using your accountant’s address here.
4 – Company Structure
Something that many contractors fail to realise when setting up a Ltd Company is that when you incorporate your Ltd Company, you are also deciding on and putting in place the company structure. You must declare whom you are appointing as a director within the company, persons of significant control and shareholding information to Companies House before you can submit a company for incorporation, and this can come as a shock to some first-time contractors
It is commonplace when setting up a Ltd Company to seek advice from an accountant before deciding on company structure. Here at Qdos Accounting, we offer initial advice on company structure and shareholding to all of our clients, so please feel free to give us a call or drop us an email for a no-obligation chat before you decide to incorporate.
5 – Company Tax Registration
Now that your company is a real entity, you will need to let HMRC know that you are going to owe them some tax. You must inform HMRC about your business within three months of starting any business activity, including simply looking for a contract. HMRC will then send you your Unique Taxpayer Reference along with information on how to complete your company tax returns and pay your corporation tax.
This is something that your accountant should be able to perform on your behalf, and here at Qdos Accounting, we ensure that HMRC is notified correctly when a Ltd Company is set up and starts trading.
Simply call us on 01162437868 if you require assistance in setting up a limited company or feel free to email us on firstname.lastname@example.org and we can arrange a call back at a convenient time.
Looking for more information? Download our guide below.
A guide to starting a limited company
Our guide to becoming a limited company includes the following tips:
- The Advantages of going limited
- How to set up a limited company
- How to set up a limited company with Qdos
- Business insurance you may require
- How IR35 effects a limited company