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Many contract professionals who are currently operating in the UK in their relevant sectors, choose to run their contracts via their own Limited Company, of which they are the Director and Shareholder. Operating this way enables you to retain more of your invoiced income due to the responsibilities that come with running your own company, as it has to be fully compliant with the UK Tax office (Her Majesty’s Revenue & Customs) regulations.
At some point you will need to engage the services of an accountancy practice, of which there are many thousands in the UK, so it is important you choose one that is not only fully competent with what is required of them, but also that they offer you the best possible value for money as well as seeing you as the customer, rather than £££ signs at the end of the email exchanges.
While some accountancy practices will quote what seems like an extremely competitive monthly fee that offers best possible value for money, there will inevitably be extra bills for standard procedures such as Company Formation (setting up/registering the company with Companies House), sending out Incorporation Certificates, setting up of PAYE, Corporation Tax & VAT schemes with HMRC, monthly or quarterly accounts, VAT submissions and then year-end tax returns.
Here at Transition, we have the ability to truly tailor the service to your needs, whether you are looking for us to offer a full concierge service where we can even set up your monthly payments each month and monitor the company account, pay relevant VAT /Corporation Tax at the correct times, to the basic service of processing then submitting your relevant tax returns at the end of each financial year to HMRC. Our main aim is to make the back end process and legal requirements as simple as possible for you, leaving you with the time to concentrate on your professional working hours each week, and then the time to enjoy your hard earned income during your leisure time.
Extracting money from your limited company?
The money sat in the company’s bank account is not your money. You can extract this in two ways:
1) Salary – through the PAYE system, you can extract your company’s profits by paying yourself a salary as a director of the company.
2) Dividends – as a shareholder of the company you receive dividends as a distribution of the company’s profit.
We will work out the best structure to use, which is usually a combination of salary and dividends.
Day to day running of your limited company?
It is essential that you set up a bank account for your limited company in which you can pay in the money you receive from customers and pay out the expenses you incur during the course of your business. You are required to retain records relating to your business including:
There are a number of taxes which you could be subject to through running your limited company:
Corporation tax – the company’s profits are subject to corporation tax (the small companies rate is currently 20%).
VAT – if your company is VAT registered, you will have to charge VAT on your sales (the current rate is 20%) and report and pay it over to HMRC on a quarterly basis.
PAYE and National Insurance – if you take a salary (or pay a salary to others) from the your company this will need to be reported to HMRC on weekly or monthly basis and the appropriate PAYE and National Insurance paid over.
As part of our service we ensure that the relevant returns are made on time and that you know what you have to pay and by when, so you can avoid any late fines or penalties.
Avoiding the common pitfalls!
Expenses – keep track of any out of pocket expenses you incur on behalf of the company (including business mileage). Failing to keep a record these will result in an increase in your company’s corporation tax bill and could increase your personal tax bill as you can reclaim these from the company tax free.
Taxes – Corporation Tax is payable nine months after your accounting year end, VAT is payable on a quarterly basis. You need to manage your cash to ensure you have sufficient funds to cover these liabilities when they fall due.
Business account – your company’s bank account should be used for company receipts and payments only. Using your business account as a personal account will only create more headaches for you and your accountant.
We will discuss all your needs with you prior to putting a quote together that will have the full list of services included that we will not then add to outside of the monthly service charge. The only time there will be an extra cost outside of the monthly fee will be when the time comes to dissolve the company (if you decide to leave the UK or move into permanent employment). As this is a process that takes over 3 months and involves extra work there is an extra charge, which will always be quoted before any work is started.
If this sounds of interest to you or any friends you know that are contracting, please get in touch to arrange a chat so we can provide a free no-obligations assessment and service quote. You can either register at www.transition2uk.com or email us at email@example.com
The majority of our business since we started trading 4 years ago has come through customer referrals. Whilst we are considered a small business compared to the larger accountancy practices, we are experienced enough and agile enough to offer a service that not only offers fantastic value for money, but will also provide true customer service to what we see as a truly valued client.
If you need to speak outside of the usual office hours (as many of our Health Professional clients need to do), then let us know and we will contact you before or after work at a time that is convenient to you. We do not stick to the normal 9-5 as customer service is central to our company ethos!
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