How to Set Up A Business: Limited Company Account or Self Employed or Umbrella Company Accounts?
So, you’ve got a great business idea. You’ve got your product or service and a target market. You’ve done your research. The next step in your journey towards launching your business is deciding what kind of company you will be: a limited company, self-employed, or an umbrella company.
Choosing the right kind of company to suit your business is integral to its success. The initial stages of establishing your business will directly affect how your business will work and flourish. However, with so much conflicting and confusing information out there, it can be difficult to make an informed decision. Which company model is best for your business?
Umbrella company accounts
An umbrella company is only good for short-term contracts of less than £25,000. Although they can be simpler to run, you will have to pay more tax. For more information, contact one of our qualified accountants and find out whether this is the model for you.
Independence, flexibility and the chance to manage yourself are all seductive reasons for going it alone with self-employment. Many of us have dreamed about dictating our own hours and establishing our own goals, but the reality of self-employment can be underwhelming. Out there on your own, you won’t have the kind of security that you have in a company; no guaranteed income, unpaid sick days, and unpaid holidays, no support from colleagues.
One of the most daunting aspects of self-employment is the amount of time you will have to dedicate to learning about financial systems: balancing books, managing tax, and many other processes you may never have had to do before.
RS Accountancy has worked with hundreds of self-employed individuals all over the country. We have the expertise to make sure that your decision to go it alone is a complete success. Contact us to find out more about how we can help you set up and manage your self-employment business.
Limited company accounts
Setting up your business as a limited company is the most common method used to establish a business. Let’s take a look at some of the advantages and disadvantages of becoming a limited company:
- Commercial credibilitySetting up your business as a limited company means that it will have a degree of commercial credibility. Some of your customers may only be interested in doing business with limited companies, as they’re credible and secure.
- Protection from bankruptcyThe world of business can be uncertain and sometimes things can take a turn for the worse. Having a limited company means that if your business is declared bankrupt, you won’t personally go bust. There is, therefore, more personal security in a limited company than you’d have if you were self-employed.
- Save on taxAs a limited company, you’ll be able to save on tax. Below is an illustration of the tax savings for a limited company.
As with all things, there are some disadvantages to being a limited company. Here are three disadvantages:
- There is more to learn — but we do 99% of that for you!
- Accountancy fees are slightly higher, but this will be more than covered by the savings you make on your tax
- You need to have a company bank account
For low cost accountants that specialise in limited company accounts contact us today.
6 steps to becoming a limited company
We make the process easy so that you can get started as soon as possible. Here are our six steps to set you up as a limited company:
- Decide who are the shareholders/directors. Shareholders are more important; these are the people who earn from the company. Directors are responsible for running the company.
- Decide on a company name, office and email us your name, address, date of birth, occupation, nationality and NI number.
- Once received, we will set the company up within 24 hours and email you an incorporation certificate.
- Set up a bank account (you will need your incorporation certificate).
- We will then set up you as an employer (for payroll) and self-assessment (for tax returns) and register as your agent with HMRC.
- You will then receive a letter from the corporation tax office. Once you do, send it to us.