Employment Status

Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.

Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.

Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.

The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]

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Contractor Limited Company Mum and Dad

Contractor Limited Company - You're Mum and Dad

Yes, its your company, its your baby.... and just like a child you have moral and legal obligations that you need to fulfill.

A limited company is a legal entity in its own right, and the directors are its legal guardians.

When a contractor sets up a limited company, they are creating a new entity that has its own rights, privileges and legal framework. Think of a limited company as an individual, it may have certain ties and bonds to others but is nonetheless independent of every and any other individual.

You cannot treat your contractor limited company as simply an extension of yourself. You may be a director and/or shareholder but you are still obliged to follow certain rule and regulations in your dealings with it.

Hey?

It can be confusing if you are new to contracting and have just set-up, or in the process of setting-up, your own private limited company. Think of your limited company as being your child.

As a parent you have various legal and moral duties to protect your child and do your best to bring them up. Same applies to running your own limited company - you have definitive legal obligations to nurture and grow your limited company.

Do Your Duty

If you remember just one thing, remember the absolute imperative to keep your business and personal money separate. Same goes for tax, income and outgoings - the line between you and your contractor limited company is jet-black and solid...and about six foot wide!

Your contractor limited company is an individual legal entity that will have its own; contracts, assets, income and tax bills. Transferring money between your contractor limited company bank account and your personal bank account is more complex than a single transfer of funds and has tax consequences.

Mum and Dad

Your contractor limited company has parents, shareholders who reap the rewards and directors who educate and discipline. Quite often, the mum/dad shareholder/director will be the same person, especially for contractor limited companies.

As a director you are also an employee of your contractor limited company, you are not self-employed. Even owning 100% of the shares does not change this basic relationship.

Contractor Limited Company Mum and Dad

Yes, its your company, its your baby.... and just like a child you have moral and legal obligations that you need to fulfill.

A limited company is a legal entity in its own right, and the directors are its legal guardians.

When a contractor sets up a limited company, they are creating a new entity that has its own rights, privileges and legal framework. Think of a limited company as an individual, it may have certain ties and bonds to others but is nonetheless independent of every and any other individual.

You cannot treat your contractor limited company as simply an extension of yourself. You may be a director and/or shareholder but you are still obliged to follow certain rule and regulations in your dealings with it.

Hey?

It can be confusing if you are new to contracting and have just set-up, or in the process of setting-up, your own private limited company. Think of your limited company as being your child.

As a parent you have various legal and moral duties to protect your child and do your best to bring them up. Same applies to running your own limited company - you have definitive legal obligations to nurture and grow your limited company.

Do Your Duty

If you remember just one thing, remember the absolute imperative to keep your business and personal money separate. Same goes for tax, income and outgoings - the line between you and your contractor limited company is jet-black and solid...and about six foot wide!

Your contractor limited company is an individual legal entity that will have its own; contracts, assets, income and tax bills. Transferring money between your contractor limited company bank account and your personal bank account is more complex than a single transfer of funds and has tax consequences.

Mum and Dad

Your contractor limited company has parents, shareholders who reap the rewards and directors who educate and discipline. Quite often, the mum/dad shareholder/director will be the same person, especially for contractor limited companies.

As a director you are also an employee of your contractor limited company, you are not self-employed. Even owning 100% of the shares does not change this basic relationship.

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HMRC Compliance

It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.

Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].

Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.