Key tax dates and deadlines for 2018/19
It is an inevitable reality that, for anyone earning a livin...
By Jonathan London on 6th July 2015
Limited Company? Sole trader? Umbrella company? When you go self-employed, one of the first questions you’re likely to ask yourself is, “How should I set up my business?”
It’s a good idea to make this decision before you start work, but you can always change your status later. Like everything else, getting it right first time will save you hassle, admin, time and expense further down the road. Regardless, you’ll need to register your business status with HMRC for tax purposes.
Which option is best for you will depend on the type of work you’ll be doing, the type of clients you’ll be working for and how much money your business is likely to generate.
Let’s take a look at the three most common forms of self-employment and how to get started with them.
A Limited Company is a legal entity in its own right. This means its finances, debts and assets belong to the company, not you or any other shareholders. Vitally, this means your personal assets remain protected if the worst happens and your business fails, and you’re likely to only lose any funds you have personally invested in the business. Companies pay corporation tax at 20 per cent of their profits, which must be settled within 9 months of your year end accounting period. For many self-employed professionals, the Limited Company route also provides the most flexibility when it comes to tax planning. This provides Directors of the company with the most tax efficient income, achieved by taking a low salary and withdrawing additional funds through dividends.
Before you start work, you’ll need to incorporate your business. Start by choosing your company name, then complete and return these documents to Companies House:
Within a few days, you’ll receive your Certificate of Incorporation. Alternatively, you can set up your business by using an accountant who will do a lot of this work for you, along with making sure your business is registered with HMRC for Corporation Tax and PAYE.
Starting work as a sole trader is quick, simple and painless. Once you’ve registered with HMRC for self-assessment you can start work. However, operating this way isn’t without risk. Unlike a Limited Company, there’s no limitation on your liability if things go wrong – i.e. you are personally liable for the business, how it operates, and any debts it incurs.
Once you’ve registered with HMRC for self-assessment, you’re good to go. Simply get your name out there and start winning, and doing, business.
An umbrella company acts as a Limited Company on your behalf. You become an employee of an umbrella company, which then contracts you out. It handles the invoicing and pays you through PAYE. Umbrella companies take the hassle out of running a company, but you lose some of the financial benefits.
All umbrella companies are different. However, most offer a simple signup service via their website or call centres.
Take a look at our recent blogs below.
As a business owner, your time is way too precious to spend hours dealing with HMRC or Companies Hou...
Published: 14th May 2018
“Never do tomorrow what you can do today. Procrastination is the thief of time” Charles Dicken...
Published: 11th May 2018
Congratulations! The very fact you clicked this far shows you are considering employing staff, and t...
Published: 17th April 2018
It is out with the old and in with the new when it comes to tax relief on childcare costs from April...
Published: 9th April 2018
The Boox accounting app has always been at the forefront of helping our clients understand their com...
Published: 26th March 2018
Spring has officially sprung and the start of the 2018/19 tax year is just around the corner –...
Published: 23rd March 2018
If your business is employing staff, you should already have a workplace pension in place, under the...
Published: 23rd March 2018
At this time of the year we are used to seeing the Chancellor holding aloft the red box ahead of the...
Published: 15th March 2018
A dispute has erupted between the BBC and 170 of its presenters over their tax arrangements and thei...
Published: 12th March 2018
The rush for taxpayers to file their 2016-17 self-assessment tax return is over for another year, an...
Published: 27th February 2018
If you are in the process of setting up a limited company or you are already the owner of an incorpo...
Published: 16th February 2018
If you need a little help to find the right accountancy service, don’t worry.
Get in touch with our friendly team for a FREE service consultation.
Thousands of contractors, freelancers and locums turn to Boox for help and advice with their limited company accounting. They love our personal service and app.
Specialist accounting for sole traders and the self employed, Boox combines easy online tools with expert support to take away the stress of handling your accounts.
Our combination of market-leading accounting software and expert personal advice gives you greater financial control and more time to grow your business.