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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Guide to a limited company and the tasks and obligations of a company director

Limited Company Director - Legal Obligations

A company director has certain legal obligations which are mandatory, you cannot pick and choose what you'll do - you do them all.

Running your own limited company means that there are certain tasks you have to do, they're not optional. You, the company director, have both legal and financial obligations to the state under penalty for inaction.

The Law

UK company law says a company director has to return a completed Annual Return (AR01), let Companies House know if there are changes to the details of a Director or Secretary or registered address and act in the interests of the company's shareholders.

As a contractor running your own limited company all these rules and some more, apply to you. It may seem a bit daunting at the beginning but that's where a good contractor accountant comes into the picture.

Finance

Company directors cannot profit at the expense of shareholders and there are several accounting tasks that have to be completed.

  • CT600: Complete a Corporation Tax return and pay the company's tax.
  • Payroll directors and/or staff under PAYE where applicable.
  • Complete company accounts each year.
  • Be able to pay the company's bills.

Magnificent Seven

Companies Act 2006 lays out seven areas that a company director has to take responsibility for. These duties are:

  1. Act within your powers as a company director
  2. Promote the success of your company
  3. Exercise independent judgement
  4. Exercise reasonable care, skill and diligence
  5. Avoid conflicts of interest
  6. Not to accept benefits from third parties
  7. Declare interest in proposed transactions or arrangements with the company

Worry Not

It's not that easy being a company director, using the services of an umbrella company is a breeze by comparison. But don't be put off just because of the back-office administration.

Specialist contractor accountants are in business specifically to provide a professional service to contractors running their own limited

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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.