You may have been wondering…
Why do agencies and clients insist on dealing with limited companies?
Simple. It’s the Law. HM Revenue & Customs (HMRC) regulations stipulate that contract agencies can only pay limited companies for contractors’ services.
Furthermore, if clients pay you as a private individual and you fail to pay the taxes due, they could be forced by the Revenue to pay on your behalf. If you bill them as a limited company there’s no such risk.
So why don’t I just go limited?
First you’ll need to take some advice to see if this is legal in your circumstances, as there are special restrictions for contractors, introduced in 2007, that may prevent you going limited.
Then bear in mind, if you go limited there’ll be start-up costs, considerable paperwork and the need to hire an accountant - who will charge you a hefty fee by the hour.
Finally, don’t forget, if you run a limited company you must keep up-to-date books, maintain separate business bank accounts, observe complex tax laws and make accurate tax returns to strict deadlines.
Scary. Is there an alternative?
Yes. There’s our umbrella company – the Liberty Bishop Solution. Basically you become an employee of the umbrella company, which then bills your services, maintains all your accounts and pays you via PAYE.
The Liberty Bishop solution is fully approved by HMRC and designed as a tax efficient, fully compliant, labour saving accountancy service for contractors like you.
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