Becoming a Contractor
Becoming a contractor can be a daunting, but incredibly rewarding career choice; certainly if you have never taken the step before. At Arleys we employ specialist freelance and contractor accountants who will take care of everything for you and help you on your journey to becoming a contractor.
Once you have made the decision to become a contractor all you need to do is the following:
- Choose a name for the business
- Decide whether you want to work through a limited company or as a sole trader; see below
- Authorise Arleys to act on your behalf
- Start trading
Becoming a contractor through a limited company
Below is a brief guide as to what responsibilities you will have if you decide that contracting through your own limited company is right for you.
The Role of a Limited Company Director
As an independent legal entity the company requires one or more directors to be responsible for the affairs of the business. For small private companies one is sufficient.
There are specific responsibilities and duties associated with the running of a company. This can carry potential risks personally, legally, and financially, if the correct advice is not sought from a specialist company such as Arleys.
A director is responsible for driving the business forward and exercises control and management of a company for the benefit of the companies’ stakeholders. A limited company director is bound by company law (Companies Act 2006) and before taking this step it is important that you fully understand the commitment you are undertaking.
Companies House have published two guidance booklets explaining the annual and event driven requirements of directors and secretaries in running a limited company:
The Role of a Limited Company Secretary
A limited company secretary takes care of the administrative responsibilities of the company. Where there is only one director that person will often fulfil this role as well. This typically includes submission and maintenance of the statutory registers of the company and making sure that the company files statutory information to Companies House and HMRC as per the specified filing dates as set out by law.
Arleys will take care of the company secretarial duties for you as part of our service and at no additional cost. We will take care of all your companies’ submissions and your personal accountant will pro-actively monitor your liability payments to remind you to pay on time.
Becoming a contractor as a sole trader
Setting up your business as a sole trader can be a great way to start life as a contractor. There is very little administration involved in the set up process and you don’t have the same set up costs as a limited company. It is one of the quickest and easiest ways of becoming a contractor and being your own boss.
What is a sole trader?
To put it quite simply, a sole trader is a business that is owned by one person. Working as a sole trader, you personally are trading as a business. The main difference between this and a becoming a contractor through a limited company is that a limited company is its own separate legal entity. As a sole trader the business and you personally are treated as the same entity for tax and administration purposes.
Things to consider when becoming a contractor as a sole trader rather than a limited company
Liability – The main drawback to working as a sole trader is that you and the business are the same legal entity. To be more specific, if the business falls into debt, then you personally will be responsible.
Professional credibility – Some agencies / clients may only deal with limited company contractors. You may want to consider whether this could potentially stop you getting work as a contractor.
Financial Support – If you are looking to get financial support from a bank or building society to help grow your business then the success rate for doing so as a sole trader is much less than it would be as a limited company.
How can Arleys help?
We are specialists in freelance and contractor accounting and we are here to “make your life simple” by offering you the service that you have been looking for. We have highly trained advisers who are here for your ongoing support and to ensure that you are getting the best out of your business. Don’t hesitate to give us a call on 01925 598 499 and see why we are, in our opinion, the best team of contractor accountants in the country.