I have been offered a few contracts in my line of work and to take full benefit and i have to set up a Ltd company sharpish.I have always known this would happen but im a lazy bugger and leave everything to the last minute.

Is it as simple as seeing a tax accountant and setting up a business bank account or is it a minefield. I will be seeing an accountant on monday but just looking for some pointers first.

Ta

It's fairly easy to do yourself, but by your own admission you are lazy and yo do appear disorgainised, so get your accountant to do it.

More or less yep – but you need to keep a better record of your finances and do a few slightly annoying admin/accounts bit on top of what you usually do.

Will you be VAT registered?

It's easy, you just have to remember to fill in the right forms at the right time.

Annual returns and annual accounts once a year, basically.

cool, gracias senors

Piece of cake.
Find an accountant who specialises in that sort of thing, rather than the guy down on the corner- they're probably better able to offer more current advice on hmrc's foibles, and may be able to offer contract advice and vetting. He'll be able to offer you a ready made company.
Decide if you want to be vat registered.
Bank account will probably take the longest to sort.

I'll give you the edited version of what I usually trot out.

"Limited" denotes a type of company, namely a private limited company. ("plc" denotes a public limited company).

"Limited" means limited liability.

A company is a separate legal entity from its owners and its directors. It has the abhility to hold assets in its own name and sue and be sued in its own name.

Most companies are limited by shares – that is the owners of the company hold shares in it. Private companies often have small share capitals – you need only hold one share to be the sole owner, or you might hold one share and someone else hold another share making you 50/50 owners.Shares are described as e.g. 10 ordinary shares of £1 each.

The share capital is the amount the shareholders are liable for to the company. So, if you hold 10 shares of £1 each, then you are liable to pay the company £10. If the company owes someone else £100 and you have already paid up your share subscription, then you do not owe anything else to that third party – the liability is the company's (it's a separate entity, remember?).

Companies are incorporated under the Companies Act 2006, and must be registered at Companies House. The records relating to companies are available for public view via Companies House. Details of what is stored include the constitution of the company (called the articles of association), filed accounts (you must file annual accounts – these might have to be audited), annual returns with shareholder details, details of the director(s) of the company (including home address). Don't be put off by this.

Your accountant will be able to help you with the incorporation, but will probably charge you £300 for it. It costs around £20 to do it yourself.

EDIT: you can incorporate same day. Just costs more.

The key for you is not all of the above (you can pay someone to ensure you keep up the filings etc.). The key is whether it is tax efficient to operate as a company – remember, all contracts will be in the name of the company (not you), so the company earns the income and makes any profits. It then (depending on rates) pays tax on this. to get the money out to you, you can receive a salary as an employee on which you pay tax (collected as PAYE) and NI contributions (with the company payinjg employer's NICs too). Or, if the company is profitable and is able in law to do so, it can pay you – as a shareholder – a distribution by way of dividend. You also pay tax on this, but no NICs.

TBH, operating via a company is easy, but not essential. It's key role is (1) tax advantage and (2) limited liability. The former may or may not suit your situation (IR35 is a biggie for some people) and the latter can be obtained with reasonable strenght via the contracts you ask your clients to enter into.

And, in any event, you're going to get PI insurance as it is (I hope!), so much of the above may become academic.

Good luck with the new business..! 😀

ourmaninthenorth – thanks for taking the time to write that out for me.

All the info was exactly what i needed. 😆

Not much to add, except you can pay a company to set it up for you if you wish, we used Companies Made Simple and it cost about £35.

My accountant tells me the limited company/dividend structure is likely to become even more tax efficient in the light of the recent budget.

I'm also a bit disorganised, but communicatuions from HMRC are really good and they are very helpful – so I've managed fine so far.

Or, buy a Ltd company off the internet for £50 or so.
Then issue shares for £1 each (say to you and your partner).
Then the company gets the contract and is paid for the work, you then invoice the company as a sub-contractor for the amount of the contract. The company makes no profit and therefore pays no tax. You pay tax at whatever your rate is.
Leave enough in the company to pay for accountancy, advertising etc.

You pay tax at whatever your rate is.

Why bother incorporating? Just put decent limits on liability in your standard terms of trading with clients/customers, and operate on a self employed basis (sole trader or as a partnership).

I got mine set up for about £50. The things that took longest were thinking of a name and getting the bank account set up. Alliance an Liester were doing Free Busines Banking which seems okay.