Starting as a LTD - Do's and Don'ts

kevsan

Having been made redundant, it looks i'll be able to start contracting soon, although the agency require me to set up as a ltd company and invoice them for days billed etc.

Fine.

So what should i do / not do and any recommendations for particular products / services?

Other thoughts....

VAT or not?

business bank account? any good / bad banks?

Accounting software?

Can I register myself at companies house and get a bank account and thats it?

How long will / should this all take?

Do I pay myself by transfer at the end of the month?

How much should I pay myselfas a salary? does the rest get paid at the end of the year as a dividend?

What other questions haven't I thought of?

Cheers in advance

Judas

kevsan wrote: »

Having been made redundant, it looks i'll be able to start contracting soon, although the agency require me to set up as a ltd company and invoice them for days billed etc.

Fine.

So what should i do / not do and any recommendations for particular products / services?

Other thoughts....

VAT or not?

business bank account? any good / bad banks?

Accounting software?

Can I register myself at companies house and get a bank account and thats it?

How long will / should this all take?

Do I pay myself by transfer at the end of the month?

How much should I pay myselfas a salary? does the rest get paid at the end of the year as a dividend?

What other questions haven't I thought of?

Cheers in advance

You would need to give us far more information.

What field? Likely income? Any employees? Insurance requirements and so on.

Annisele

My advice would be to find yourself a good accountant.

You might have a problem with IR35 - no idea on what you've written - but an accountant can help you with that any many other potential pitfalls.

PasturesNew

As an ex-contractor, who operated under a Ltd company at the time.... I'd say don't do it.

It's just hassle and cost. There's a much better way: investigate umbrella companies.

The main reason to go under an umbrella is you get a monthly payslip and when your contract ends, if there's no more work, then they'll issue you with a P45 and you can go on the dole. Become a Ltd company and you can't do that and you end up having to wind up your company and it's all quite annoying.

I want to go contracting again and I'll definitely go under an umbrella rather than starting a Ltd company.

Of course, if you're trying to work the whole dividends/IR35 situation, then you'll need to do your homework. But if you just want to do contracting, without the hassle or for the short-term/medium-term, then an umbrella might be better.

kevsan

hi.

Would be IT contracting, approx £200 - £250 per day, no employees just me.

have no idea about insurance, I expect some kind of liability insurance would be needed?

Hammyman

PasturesNew wrote: »

As an ex-contractor, who operated under a Ltd company at the time.... I'd say don't do it.

It's just hassle and cost. There's a much better way: investigate umbrella companies.

Excellent suggestion at a time the HMRC is currently on a witch hunt in respect to umbrella companies.

Hammyman

kevsan wrote: »

hi.

Would be IT contracting, approx £200 - £250 per day, no employees just me.

have no idea about insurance, I expect some kind of liability insurance would be needed?

Public liability at a minimum. Beware though, if your work is mostly for one company, you may fall foul of IR35. Google "IR35 IT contractor" and it'll bring up lots of tales of woe of people who thought they were IT consultants but were actually classed as employees under HMRC rules and they got stung for £1000's in tax recovery.

Try to avoid VAT if at all possible but if you end up on £200 a day, you're going to be below the threshold anyway, even if you do 5 days a week every week of the year.

Annisele

I'm also an ex-contractor, and I'd avoid umbrella companies - but that's based on personal opinion rather than any knowledge of HMRC witch hunts.

I didn't work in IT, but I know quite a few contractors who do. Purely on the basis of personal opinion and not professional knowledge, I'd say that in order of least to most hassle the ways to do this are:

• Get a good accountant from a small firm. (I did this - he's a one man band, and I thought he was *excellent*. He gave general advice, such as whether I should set up as a limited/partnership/sole trader, and didn't just 'do accounts'. He was more expensive than most, but gave advice when I needed it rather than in two weeks, dealt with HMRC when they messed up, and saved me more than he cost me).
• Get a good accountant from a large firm.
• Use an umbrella company. (I know a few people who did this; it's relatively cheap but you get what you pay for).
• Do everything yourself.
• Find a bad accountant of any kind (sadly they do exist, but you'd be unlikely to find one so bad that you'd be better off sorting things out yourself).