Limited Companies

Limited Companies: How it Works

Making the leap to incorporate and manage a limited company is a big step, but one that can bring numerous benefits. Although currently considered to be the most tax efficient way of working as a professional contractor in many circumstances, the attributed paperwork and financial hurdles associated with running your own company can seem a little daunting – a potential minefield of financial jargon and complex forms.  

We at United Associates understand this, and are able to offer you and your business all the help that you need to succeed. We are dedicated to providing a fixed fee, limited company accountancy service to professional contractors, offering advice and assistance on anything from payroll to personal tax returns.

Your personal account manager will help you decide on the best course of action for you, and help you ensure that the needs of your business are fully catered for. With a well qualified and highly trained team dedicated to taking care of every little detail, you can relax, safe in the knowledge that we've got it covered - leaving you free to concentrate on growing your business.

Frequently Asked Questions

What are the benefits of running my business as a limited company?

It can be a big step to decide to work as a limited company contractor, but it is usually the most tax efficient way of working. As the director of a limited company, you draw a salary from the organisation which is subject to normal tax and National Insurance. However, the remaining profit can then be paid to you as dividends (in certain circumstances) and is not subject to employed rates of tax or National Insurance – helping make your profits go further and putting more cash in your pocket.

Is being the director of a limited company suitable for me?

Although the benefits are great, everybodys situation is different and some may not be suitable for the change. For others however it will be the best business decision you have ever made. If you meet the following criteria your own limited company is probably right for you –

  • You are planning to work on a contract basis for a reasonably long period of time.
  • You earn at least £500 per week, or £25,000 per year.
  • Your contractual arragements fall outside of IR35
  • You are prepared to undertake some basic record keeping
  • If you think your business meets these criteria it is worth considering making the move to limited company status, and taking advantage of the benefits it offers.

What will I need to do once my company is incorporated?

United Associates will provide you with a comprehensive handbook to help us to help you to manage your company. When the company has been opened on your behalf, you will need to take the company details to your bank to open a business bank account. If you do not have a local bank, we can put you in touch with someone that can help. You will need to keep basic records of your business expenses and keep all receipts, we will provide you with a simple spreadsheet to help you to do this. You will also need to make sure that all contracts that you undertake are in the name of your company. Please ask for assistance with this if you need to.

What duties will I have as a company director?

The duties you will need to undertake as a company director are reasonably straightforward. They include:

  • Keeping good records from which accounts can be prepared which give a true representation of the financial position of the company.
  • Producing accurate accounts, filed at the due time with Companies House
  • Submitting corporation tax returns to HMRC and pay any tax due
  • Dealing properly with the payment of staff, deducting tax and National Insurance as appropriate and paying it to HMRC by the due date
  • Trading solvently, ensuring that you are able to pay the liabilities of the business
  • Such tasks may seem daunting at first, but United Associates offer a full and comprehensive service that helps ease the pressure of these new tasks, and take care of most of them for you.

Do I have to be a start-up, or is the service suitable for an established limited company too?

United Associates service is ideal for any limited company. If you have already made the move to limited company status, but would like some assistance in the day-to-day workings of the financial side of things we are happy to assist.

What is IR35, and should it be a concern?

IR35 is a term used to describe tax legislation that is designed to tax disguised employment at a rate similar to employment income. In this context, disguised employees means individuals who receive payments from a client via an intermediary (such as a limited company) and whose relationship with their client is such that had they been paid directly they would be deemed to be employees of the client.

To ensure that you are not affected by the IR35 legislation we work through a questionnaire with you when you register. We also recommend that you take an IR35 contract review to ensure that your status is correct and that you are not in any danger of falling foul of the legislation.

What is Section 339A ITEP, and should it be a concern?

Section 339A prevents Limited Company contractors from claining work related travel and subsistence expenses if they are subject (to the right of) Supervision, Direction or Control of anyone. This is only a concern for Limited Company contractors if their assignment is inside IR35. (see above).

We take our lead from you

Working with your personal account manager you can tailor make a package depending on exactly what your business requires- if you want us to handle all your financial affairs that’s no problem, but if you just want a helping hand with your tax return, that’s fine too.

For more information, or to discuss the ways that United Associates could help your business

contact us