Forming a limited company is a big and exciting step in your contracting career. Though you are faced with many new responsibilities, there are also a lot of benefits associated with working through your own limited company. We’ve outlined these benefits below.
An increase in take home pay
Limited company contractors can expect to take home around 75-80% of their earnings due to the possible tax efficiencies of working as a limited company. In comparison, umbrella employees can only expect to enjoy around 60% since umbrella employees will have tax and National Insurance contributions taken before wages are paid to them.
To find out how much you could earn, try our take home pay calculator.
Control over your business
Running your own limited company means you’re in charge of the decisions and as the director, you’re in control of your income and expenditure. You’re also able to pay yourself a mix of dividends and salary to make up your take home pay. Having a specialist contractor accountant by your side will be beneficial here in ensuring you pay yourself as efficiently as possible.
If your contract is outside IR35, you can claim on a number of expenses as long as they are incurred solely and exclusively for the purpose of the business. This means you can enjoy tax relief on a number of daily expenses such as travel, internet and accommodation.
For more information about what you can claim, take a look at our guide to expenses.
As the company director, your personal finances will exist separately to your business assets. This means that you will not be liable for any financial losses made by your business and your personal assets will be protected.
Greater levels of freedom
Contracting through your own company gives you greater control over when to work, which roles you’d like to take on and how much to charge your clients. You’re not at the mercy of a recruiter or employer, meaning you’re free to make more of the decisions.
Ready to go limited?
Whether you’re currently working under an umbrella company or you’re new to the contracting world, Nixon Williams can help.
For support and advice setting up your limited company, contact the team on 01253 362062 or send us a message.