If you are a contractor, freelancer, director or temp working in the UK our team can help you find a payroll service thats a great fit for your individual circumstances.
A limited company is often used by contractors to engage and contract directly with their clients or agencies.
A limited company is formed by the contractor, appointing themselves as the director and shareholder. They will be able to liaise directly with their clients/agencies directly via the limited company and invoice for the work they have completed. They will receive the gross amount directly into their business bank account.
There are certain tax advantages of operating this way. Many directors will pay themselves a small PAYE salary and a dividend, taking advantage of lower thresholds for tax and national insurance. Using the advice of their accountant they may be able to offset costs and expenses incurred by that limited company, such as tools, equipment and travel. Some will also use their limited company to employ their spouse and pay them a PAYE salary below the personal allowance threshold, to further minimise their tax labialilities.
A certain downside of using a limited company is the additional administrative burden this generates. This includes collecting receipts, invoicing and chasing payments, business paperwork and organising the correct deductions for tax and NI. A good accountant will make these tasks as pain free and as straight forward as possible.
It is worth noting that IR35 legislation has affected many contractors operating through a limited company and will affect many more to come in April 2021.
We can help you. Contact us today to find out how IR35 affects your payroll options.
• You are the owner of your limited company and have full control of the business.
• You are able to pay yourself a relatively low salary and take other remuneration in the forms of dividends – increasing your take home pay.
• You may find that your brand (company name) establishes a good reputation and brand awareness, helping you generate more work from word of mouth or through advertisement such as social media.
• Your end clients or agencies would engage with your limited company rather than you personally, creating a layer of legal cover on your behalf.
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