Seven reasons to choose a limited company when contracting
Higher take home pay
You’ll typically take home around 75% – 80% of your contract by working through your own limited company, you can take home as much as £15,000 per year more on a £350 daily rate compared with using an Umbrella Company.
Claim on a wider range of expenses
Anything that is solely classed as a business cost can be claimed back on expenses. Trading through a Limited company means you can claim on a wider range of expenses such as accountancy fees, equipment, software, phones, travel, Internet and much more.
Registering for VAT can save you money on business expenses where VAT can be reclaimed. Alternatively, the Flat Rate VAT scheme may be an option for you. The scheme is easier to administer and can create some small savings.
Personal assets are covered
As a non-limited business, personal assets can be at risk if the business fails, but this is not the case for a limited company. As the shareholder you cannot be held personally liable for the debts of a limited company, meaning your personal assets are not at risk.
Complete Control of your Business
You keep complete control of your financial affairs meaning you do not have to risk your money with any third party and you have full autonomy over when, where and how you work.
Ease of use
Running your own business isn’t difficult; your personal accountant will help manage your finances. Working through your own limited company does require a certain level of commitment but typically most contractors tell us they spend around 15 – 20 minutes per month managing their company.
Greater opportunity for tax planning
It goes without saying that working through your own limited company is more financially rewarding, which is only fair bearing in mind the extra responsibilities and loss of full-time employment benefit.
Company given more credibility
Operating as a limited company often gives suppliers and customers a sense of confidence in a business and quite often other companies prefer not to deal with non-limited businesses.
Protection of your company name…even if you are not contracting. 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, waiting to register your company could mean you lose the name you had initially wished to trade under.