If you are new to contracting or freelancing your first thought is likely to be ‘what’s the best trading method for me?’
It is important to get proper balanced advice to help you make the decision as some accountants might steer you towards a Limited Company when actually a Sole Trader Solution would benefit your situation, or vice versa.
The first thing to consider is your anticipated turnover – there may be tax efficiencies in operating through a Limited Company which could maximise your take home pay. Many people are attracted to the status of being a Company Director and trading this way also provides security, as the owners and shareholders of a Limited Company are not usually personally liable for any debts run up by the business.
But trading through a Limited Company brings added admin burden and directors responsibilities, such as filing annual accounts and information on company shareholders. You are also liable to pay Corporation Tax on profits.
Tax Efficiencies Vs Hassle
If you don’t think the tax efficiencies are available as you don’t expect your turnover to be that high, or if you are just a little frightened about the responsibilities involved in running a Limited Company then often when starting a business the simplest way is as a Sole Trader. After registering with HMRC, you are simply required to complete a Personal Tax Return each year and pay tax on the profits you make.
Get the right advice
Whatever you do, don’t make the decision without seeking advice first, and although he might have great trivia knowledge ‘Bob from down the pub’ might not be your best option here. Seek out a specialist accountant with experience in your field (ask around for a personal referral from others already contracting, or ask Bob to recommend one!), set up a time for a chat either face to face or by telephone, and discuss your options. Most decent accountants will provide this initial meeting for free.
Self Assessment – Q & A
Self-assessments. We have all heard of them, you maybe even know what they are. However, here at QAccounting some of our most frequently asked questions are about self-assessments. So below we have outline some of the most common questions we get asked, and the answers we get so tired of giving… just kidding.
Setting Up a Limited Company – 5 Key Things to Consider
If you are looking at going self-employed, then setting up as a Limited Company (LTD) may be the best option for you.
The Benefits of Having an Online Accountant
Here at QAccounting we are part of one of the UK’s largest contractor service providers. We started operating over a decade ago (around the same time DFS started their first sale) and have been dedicated to serving self-employed professionals ever since. One of the perks of choosing and accountant like QAccounting is that we offer all of our accounting services online.