any advice, words of wisdom about setting up a limited company. My wife is going to work for herself on short term contracts and has been advised to do so. thanks

Takes 20 minutes and ~£18 to set up a Limited Company.
Go to the Companies House website and there is a guide on how to do it there. Dead easy to set up, you do not need anyone else, certainly not one of these companies who say they do it all for you.
For small Companies you no longer need an Accountant to submit your tax / year end figures, you can DIY.

Tax is slightly more complicated, but easily done if you follow the rules. The tax guides are all available as .pdfs from the HMRC site, as well as loads of other sites offering guidance on the matter.

I’ve been self employed for years and have never felt the need to be a limited company. There are costs and formalities involved with a limited co. that you can avoid if self employed and can fill out a tax return online.

Thanks guys – helpful, will be looking into it in more detail in the New Year.

There are pros and cons of being a limited company.

If you expect the company to make enough profit to take you into the higher rate tax band, then being a limited company can be more tax efficient (classic accountant speak!) although not necessarily. If your personal income goes above the higher rate threshold then you still pay higher rate tax.

You also pay less national insurance if you are an employee of the limited company, as long add your salary is less than the NI threshold (just under £8k). You pay yourself more by taking dividends from the taxed profit.

So you might give a bit less money to hmrc but you have to submit your accounts to companies house in a certain format. Not rocket science but something that needs to be done correctly and it’s a bit of a minefield, and one more thing to think about if you’re busy running a business! To pay an accountant to do it will cost maybe £1k. Therefore if you are a small company there is unlikely to be a financial benefit.

Whether you benefit from any kudos or reduced personal risk from being Ltd depends on the industry you’re in I guess, but it’s another factor to consider. I think most lenders or suppliers would still ask you to be personally liable for any debt, unless you have some trading history.

This is just my understanding which I’m still learning, hope I haven’t given you a bum steer. Definitely worth speaking to an accountant anyway.

I’ve been self-employed for about 12 years and have always been a sole trader. I have found it worthwhile to get an accountant to do my year end tax returns – costs about £200 and he saves me more than that in finding things to set off against tax – e.g. depreciation on any assets such as a computer, what I can set aside against tax and what I can’t.

In some instances it may be the only course of action to be a limited company – many interim management roles require you to be a limited company.

Get a good, recommended accountant. Then get them to help every step.