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A step-by-step guide for contractors in the UK
This may seem like a simple step but large organisations have spent millions of pounds in choosing the perfect company name. Our advice would be to choose something that describes what you do whilst also being web friendly but the decision is yours to be as creative or practical as you like.
You’ll need to register your company name with companies house with some basic information including your full name, address, mother’s maiden name and contact details.
You’ll then need to set up a bank account for your limited company, complete a VAT Registration (if applicable) and register your company for the relevant taxes.
No. There is no legal requirement for an accountant to be appointed. However, given the red tape involved in filing company returns, preparing accounts and dealing with HMRC, even small companies find an accountant by their side to be invaluable.
Yes. But just check that your employment contract doesn’t restrict you from running a business. It’s a good idea to let your employer know that you have another job or business on the side.
As a director of your own limited company, you will be taxed and pay National Insurance Contributions on any salary or wages you pay yourself. Your limited company will act as your employer and account for the taxes to HMRC. A Tax Code will be assigned to your company by HMRC reflecting your main employment.
As the director of a limited company you can set your salary (Director’s Fee) at any level because directors are not subject to the National Minimum Wage or National Living Wage. We advise our clients to take a salary of at least £165 per week or £715 per month as this is a tax efficient salary level and ensures you retain your entitlement to state benefits. As a shareholder you can also take profits from the company in the form of a dividend.
You will be employed by your limited company as a director – you will not be classed as self-employed.
If you use our My PSC service, PayStream can send your company details and Certificate of Incorporation to your agency to allow them to draw up a contract. Your company’s bank details will follow once you provide them to PayStream.
As soon as your company bank account is open and your agency/client is given the details you are ready to be paid. If you decide to use one of PayStream’s limited company accountancy services, you must also have completed the online joining portal and returned a completed starter pack with additional forms that are required.
It is an industry wide requirement to have Employers’ Liability, Public Liability and Professional Indemnity cover and you are free to approach any broker for a competitive quote. At PayStream we have negotiated a low premium with three different levels of cover, Bronze, Silver and Gold. Contact us for more information.
How much would your take home pay be when operating through a limited company?Try our take home pay calculator
We recently had the pleasure of speaking with Tabatha Rose who has taken the exciting step of setting up a limited company and, as a result, is now a director of her own business. We wanted to know how she has got on over the past six months.
Making the move to a limited company contractor can be quite daunting. Our infographic helps to the processes of working as a limited company contractor in the simplest of ways.Download infographic