Why set up a limited company?

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For the majority of contractors, joining an umbrella company is the easiest way to start their new careers.

Once you’ve mastered the basics and decided that you’re in it for the long term, we understand that you’ll want to start thinking of the future. If you want to progress to the next stage of your career, why not consider setting up a limited company and becoming fully self-employed?

But what are the benefits of doing this? Here’s what you could enjoy as a limited company director:

Maximised income

Setting up as a limited company is widely considered to be the most tax-efficient way of working. You can take earnings from the business as a combination of salary and dividends – reducing your overall tax liability.

You can also leave income in the company to be withdrawn in the future, something that’s particularly useful if you’d end up with a higher personal tax rate by removing the funds in one lump sum.

What’s more, you’d be able to take out an interest-free loan of £10,000 or below from your company. You just need to pay it back within nine months of the firm’s accounting period.

Greater flexibility

As a limited company director, you not only get to pick and choose your assignments, but also when you want to work. This means you’ll be able to schedule work around your non-work commitments and never miss an important occasion.

Because you’re more likely to source your own assignments, you’ll be able to choose a project that fits your skills and expertise perfectly. This means you won’t have to rely on a third party to find work.

The chance to be your own boss

This is definitely one of the main reasons why people choose to set up their own company! Becoming a limited company director gives you more control over your own career.

Limited exposure

Another important feature of a limited company is the fact that your personal assets are completely separate to those of your business. Of course we hope the worst doesn’t happen, but if it does – you can be reassured that your personal funds won’t be at risk.

Want to know more?

If you’re thinking about going limited, help is at hand. Our sister company, ClearSky Contractor Accounting, has helped thousands of professionals take their careers to the next level.

ClearSky will be with you all the way, from incorporating your business and assisting with paperwork & self-assessment tax returns, through to providing financial advice and help with IR35.

Like us, ClearSky understands your busy WorkStyle and moulds its services to suit you.

For more information about what ClearSky can do for you, please call 0800 458 0818 or email enquiry@parasolgroup.co.uk.

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