While setting up their own limited company is arguably the most tax-efficient way for contractors to work, it brings with it a significant amount of paperwork.
This can present a certain degree of pressure for people who are not used to handling the administrative side of their work. Nevertheless, it is extremely important to fill out all of the forms and comply with all the business legislation outlined by the government and HM Revenue and Customs (HMRC).
One of the most challenging tasks for limited company contractors to handle can be setting themselves up for corporation tax and preparing their statutory documentation.
While this may sound daunting, contractors should remember services such as PayStream's 'My PSC' can help, so if you are not feeling 100 per cent confident about handling these tasks, a professional can help to ease this burden.
Limited companies making taxable profits should be paying corporation tax to HMRC. The directors are responsible for informing the tax body that they will be supplying it with these payments, while they also need to ensure sums are paid on time and company tax returns are filed.
However, this can be somewhat confusing, as there are separate rules relating to both the payment and filing of this type of tax. Remember, payment must be received by the tax organisation electronically.
HMRC must receive payment before nine months and one day has passed following the end of a company's corporation tax period has ended. The tax return must then be filed before one year has gone by after this tax period has passed. Failure to follow these rules can result in penalties, including significant fines and even greater sums of tax being owed to HMRC.
Contractors setting up their own limited companies also need to make sure they are keeping certain statutory records relating to any changes that happen within their business.
Companies House has a very specific set of rules regarding this, stating any developments - such as changes in directors, secretaries, registered offices, to name just a few - must be recorded with Companies House itself, as soon as possible after they occur.
Failure to keep accurate records can result in significant penalties and even prosecution, so it is vital limited company contractors are keeping on top of their books.
However, with so many items and changes to record, it can be difficult for contractors who are engrossed with other aspects of their work to remember absolutely everything that needs to be done, which is where PayStream can help. Our limited company service is designed to help you with your limited company admin and advise you when needed - leaving you to get on with what you do best.
How could PayStream help?
For contractors who do not feel confident enough about handling the preparation process by themselves, PayStream's My PSC service could be of particular benefit.
This service helps contractors to set up and run their own limited company in the most tax efficient way.
My PSC can also give assistance to companies who are unsure how to register for PAYE, VAT and corporation tax, taking another weight off the director's shoulders. This gives the limited company contractor greater peace of mind and keeps them working compliantly under HMRC's rules.
Help with bookkeeping and the management of accounts is also available, as My PSC will assist in the preparation and submission of the most important company documents, including annual returns, statutory accounts, RTI Submissions, P11D and P60 forms.
If you would like to know more about how our limited company service can help you please visit here, or call 0800 197 6516.