Why set yourself up as a Limited Company?
For many Australian and New Zealand professionals who’ve decided to embark on the exciting opportunity of an OE, the concept of contracting is quite new. They’ve heard great things about the huge earning potential and flexibility for time off and travel, but don’t fully understand how. They’ve also heard that setting up a Limited company is often the most effective way to structure their finances to get the most out of their earnings but that also brings with it lots of questions.
So here to help are our top 12 Limited Company Q & A’s to help you get to grips with contracting in the UK.
1. What is a Limited company?
A limited company is an option that many contractors choose so they have full control of their own finances and the contracts they want to accept. The limited company is seen as an organisation that has its own identity, and does business under its own name. Understanding that the company is separate from your personal affairs is important because it explains why the legal formation of a limited company works the way it does (limited company equals limited liability). As a limited company, you would have the ability to pay yourself a salary and dividends as you are the shareholder of the company. As you are your own boss you are in control of the company and personally working with your chosen accountant to ensure you maximise the tax benefits available to you.
2. Can I set up a UK Ltd company even though I am not from the UK?
There are no restrictions on foreign nationals being a UK company director or shareholder – you don’t even have to live in the UK, as company registration for non-UK residents is exactly the same as for those living in the UK.
3. Can I set up my Ltd Company at home before even arriving in the UK?
Yes definitely, a company can be set up before even making the move over to the UK. If you would like to start this process now or to hear more about how this can work then get in contact with our London expert Arron here.
4. What is the benefit of setting up as a Ltd company?
A limited company gives you total control over your contracts and financial affairs as the director, owner and boss of your own company. Working with an accountant can also ensure that you absolutely maximise your tax benefits through dividends, salaries and expenses. Not only does a limited company show a professional image, but it also shows a company that you, the director, are solely responsible for the role and contract you are undertaking.
5. How long does it take to set up a Ltd Company?
If you have your hands on the right paperwork/documents and have sufficient knowledgeable support, then a limited company can usually be set up within 48 hours or less.
6. What documents do I need to set up as a Ltd Company?
To incorporate your company you will require your passport, and due diligence will need to be completed by your accountant to ensure that you are and will be trading correctly.
7. Does my Ltd company need a name? If so can it be anything I like?
Yes, the LTD company will require its own name, we recommend staying away from your personal name to ensure that you are not confused for a sole trader. You need to make sure that your chosen name is available at Companies House ie. it’s different from any existing names and doesn’t contain any sensitive words – your accountant can help you with this.
Always think of a few names in advance as you may find your first option is not available.
8. Do I need a company address?
Yes, the company will require a registered office, and this will be an official address that will be made public and where legal documents and letters from Companies House and the HMRC can be served. It doesn’t have to be the trading address, and it can be your home or even your accountant’s office.
9. How can I make sure that my Ltd company is incorporated?
As part of the limited company set up, you will need to register with Companies House and this is known as ‘incorporation’. Once successful you will receive a company certificate informing you of the successful setup of your company, and it will also be made public on Companies House where you (and anyone else) can search the name.
10. I understand that I need at least one director and one shareholder to set up the Ltd company, but I want to set up alone?
You personally can be both the director and the shareholder of your company, but you can add more shareholders if you want to at a later date.
11. Do I need a business bank account?
Yes, it is mandatory to have a dedicated bank account for your limited company business, so that your business is legally a completely separate entity to yourself and revenues earned by the company must be paid directly into the company account. Most banks allow for a company account to be created, and the account can be set up quite simply within 24 hours. MyOE can talk you through the process for this and help you get this set up through one of their close partners if you require assistance.
12. What can MyOE do to help?
Deciding on whether a limited company is right for you, and then the physical set up of a new company can seem daunting to a new contactor making the move over to the UK. Fortunately, MyOE has worked with many contractors on their path to make this decision easily and in turn get things moving promptly. We are happy to help with any questions you may have surrounding what the requirements of setting up a company entails, the tax benefits and what is required from you as a director and shareholder of your own company. If you would like to talk this through further then get in touch to schedule a call with one of our Australian offices and/or our UK office and get all your questions answered by one of our MyOE experts. If you would like some more general guidance on starting to plan for a successful professional OE then download our free helpful handbook with all the information you need to get started.