Limited Company benefits for Contractors

If you have ruled out an 'off-shore solution' (very wise) and concluded that an umbrella company doesn't give you the financial benefit from taking the leap into the freelance contractor market, then going 'Limited' is the right answer. There are plenty of reasons to do it.

What are the benefits of Contracting through your own limited company?

• Limited Liability
  The main benefit of trading via a limited company has always been the limited liability bestowed upon the company's officers and shareholders. As a sole trader or other non-limited business, personal assets can be at risk in the event of a failure of the business, but this is not the case for a limited company. As long as the business is operated legally and within the terms of the Companies Act, the personal assets of the company’s directors and shareholders are not at risk in the event of a winding up or receivership. A shareholder cannot be held personally liable for the debts of a limited company.
• Confidence and credibility
  Operating as a limited company often gives suppliers and customers a sense of confidence in a business. Quite often, larger organisations in particular will prefer not to deal with non-limited businesses.
• Economic and practical
  Many of the costs associated with managing and operating a limited company are no longer much greater than with a non-limited business. In general, at least from the perspective of taxation and accountancy, changes to legislation over the last few years have meant much lower costs associated with limited companies.
  The Companies Act 2006, fully in force from 1 October 2009, de-regulates parts of earlier Company Law making the operation of a private company much easier in practical terms.
• Protect your name
  There is no obligation for a limited company to commence trading within any set time period after its incorporation. This means that the formation of a limited company is a simple and low cost method to protect a business name.
  Once your proposed company name is registered as a limited company, the name is protected by law and no one else is allowed to use it in that jurisdiction. This does not usually apply to a business name, as this confers no exclusive or proprietary rights and offers no protection against duplication.
• Tax efficient
  Using a Limited company is the most tax efficient way of working. You will take home more money (>£10,000 more on a £350 daily rate compared with using an umbrella company).
• Contractor expenses
  Contractors can claim a wide range of business expenses to reduce their tax bill - accountancy fees, equipment, software, phones, travel, internet, etc.
• Flat rate VAT scheme
  Working through a Limited company gives contractors access to the Flat Rate VAT scheme, which usually generates a VAT saving in excess of £1,000 a year.
• IR35 Limited company advantages
  There are advantages under IR35 - even if you're inside IR35 for one specific contract it will still be worth it. Speak to a qualified contractor accountant for more advice on how you can benefit.
• Control
  You keep complete control of your financial affairs meaning you do not have to risk your money with any third party administrator.

Running your own business isn't difficult with Orange & Gold. Choose from either CORE or PREMIER.