FORMING YOUR COMPANY

There are a few options:
· Limited Company
· Umbrella Company
· PAYE through the Agency

 

LIMITED COMPANY

Setting up a limited company is mostly recommended. This can be done in three ways purchase a company name "Off the shelve" these are normally advertised in trade press under business section, secondly Go to Companies House to register your company name, finally you can purchase a name that someone holds and is available for sale.
The recommended and easiest method is to get your chosen accountant to do this for you, presently some accountants set your limited company up free as an extra benefit to their clients, as mentioned in "Choosing an accountant.
You will need to choose a company secretary this can either be a close relative many contractors chose their spouse. The duties of the company secretary is a legal obligation to perform administrative duties and minute company meetings
Once your Limited company is set up you should receive the official certificate of Incorporation with your company name date of registration from Companies House inform you that your limited company has been formed

UMBRELLA COMPANY

Umbrella company allows the contractor to concentrate on his/her day to day duties whilst all the administration is taken care of, this method is more expense than a limited company as you are paying for the administration of invoicing, calculating tax & NI, receiving payment and finally paying you your salary. There are very little tax advantages for the umbrella company mainly due to the introduction of the IR35 legislation.

Two types of Umbrella Company.

MANAGED COMPANIES
This is all the umbrella company with the extra benefits of holiday pay and sick pay. Again there is an additional charge for these benefits
COMPOSITE COMPANIES
Again all the benefits of an umbrella company with the contractor being a part-shareholder of the "composite" company. You would receive a basic salary with the balance of their income going into a shareholding. The shareholding is normally retrieved normally years later when it is more beneficial

PAYE THROUGH THE AGENCY

There a very little benefits of having a PAYE as you would be required to pay full tax & NI, you will not able to manage a company car or receive any expenses, this option is normally available by some agencies

Once you have managed to get your first contract no need to

Once you have secured your first contract role, agreed a rate and a start date, a contract needs to be signed between your Invoicing Company and the Recruitment Agency (or between your Invoicing Company and the Client if you are going direct).

The vast majority of agencies, if not all, require you to invoice using a limited liability company. This can be done from your own limited company (often referred to as a Personal Service Company) or from a managed company (often referred to as an Umbrella Company). Some agencies allow you to become "PAYE" through their own payroll service, although this is the least tax beneficial option available to a contractor.

With IR35 now law; it is essential at this stage to run your contract via an expert who can assess the effect of IR35 on your business. We have listed links to several legal specialists in our