Could working through your own Limited Company be a wise decision? Well for some it may well be, whilst others may choose an Umbrella Company for ease and simplicity.
At this point it is very important to stress that these must be genuine, one person Limited Companies and not a 'scheme' dreamed up by what are nothing more than marketing organisations. Despite what you may have read or been told by some providers - there is no problem what so ever with working through your own Limited Company under the new MSC legislation. Please visit here for more information.
Form a Limited Company
The three main things you will need to do are: Form a Limited Company, open a business bank account and appoint an accountant, some contracts also insist on professional indemnity and professional liability insurance.
The real decision comes down to personal choice - yes you may take home more money, but you will spend more time managing and operating your company. A specialist firm of accountants like Dolan Accountancy, can help manage your tax affairs but there will inevitably be some administration you will need to complete each month.
A full review of the pros and cons of each method can be found below. If you would like more information about going limited we suggest downloading Dolan's latest step-by-step guide to contracting through your own limited company.
If you have any question about contracting or would like any further advice, please either call our new client services helpdesk on 01206 713680 or e-mail firstname.lastname@example.org
|PAYE Umbrella Company||Limited Company|
|Very easy to use, you simply enter your timesheet and expense details and wait to be paid.||The most tax efficient way of working.|
|All tax and NI is deducted before you receive your money, so you will have no further taxes to pay.||You keep complete control of your financial affairs.|
|Ideal for short term contracts.||Access to the Flat Rate VAT scheme.|
|Insurance policies included as part of the service.||Running your own business isn't difficult (it may be time consuming but it isn't hard).|
|Most importantly someone else will be doing all the paperwork.||Greater opportunity for tax planning than PAYE Umbrella.|
|Perfect if you are unsure if contracting is for you and you're really just in between permanent jobs.|
|Your salary will be subject to full PAYE Tax and NI.||There is a certain amount of paperwork involved.|
|You are reliant on the umbrella company to collect your money from the client or agent and then to pay it to you. ContractorUmbrella will chase any overdue payments, on your behalf, free of charge.||Can be costly if you contract for a very short period of time and than go back to permanent employment. You will be tied into a full 12 months of accountancy fees, regardless of contract length, and have to pay out for annual insurance policies.|
|Not ideal for low earners.|
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