Home > Thinking of Becoming a Contractor > Deciding How to Start Contracting > Contracting as a Limited Company

First Time Contractor - Contracting as a Limited Company

Preparing and setting yourself up as a contractor Limited Company involves the following steps:

1. Forming your Limited Company

When operating through your own Limited Company it is a legal requirement to register your company name.

You can check the availability of a company name by using the Company Formations Made Easy service.

Complete a short company formation document and we will form your company within 24 Hours. You will receive all the relevant company formation documents you need by post.

2. Setting Up a Business Bank Account

Your Limited Company is an entity in its own right and as such you are required to set up a business bank account.

All transactions associated with the company should go through the business bank account so that they are transparent and clearly distinguishable from your own personal transactions.

Our recommended banking service provider is Barclays.

3. VAT Registration

There is no mandatory requirement to register your company for VAT unless you breach a certain threshold (currently £85,000 for the 2017/18 tax year).

Registering for VAT, however, can have significant financial rewards but it might not be suitable for your company so please read our guide to VAT to help you make an informed decision about VAT registration.

Expenses

There are various expenses that you can claim for provided they are incurred wholly and exclusively for the purposes of your business.

However, the rules stipulated by HMRC are complex and constantly change so it is advised to read our guide to expenses which summarises the most common types of allowable expenses you will come across.

4. Deciding upon a Bookkeeping and Accounting Service

As a Limited Company you are legally obliged to create minimum compliance responsibilities and obligations as stipulated by the Companies Act of 2006 and HMRC.

These include but are not limited to:

  • Submitting annual statutory accounts to Companies House
  • Submitting a confirmation statement
  • Submitting an annual company tax return to HMRC
  • Provide dividend documentation (if declared)
  • Provide board minutes and resolutions
  • VAT returns
  • PAYE/payroll payslips, RTI returns and administration

You are also legally obliged to keep records of all your company’s transactions for at least three years (six if VAT registered) in case HMRC decides to audit the affairs of your Limited company.

Aidhan Accountancy can look after your accounting, bookkeeping and tax, all your compliance, administration and any tax planning is dealt by us leaving you to concentrate on your contractor/freelancer business.

5. Using our One-Off Limited Company Set Up Service

If you’re undecided about using any particular accountancy service or have decided to have a crack at it yourself, then to help you get started you can use our one-off Limited Company Formation and Registration service.

If you have any further questions or want some advice please feel free to call us on 0203 368 3173 or email us at info@aidhanfinancial.com.

Aidhan Accountancy

Sutherland House, 3 Lloyds Avenue, London, EC3N 3DS