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Making the move from Self Employed to Limited

So you've decided to make the move to limited? After forming your Limited company, you'll need to ring up HMRC and let them know you have changed
 your company structure. They will need to deregister you as self employed and for all Class 2 National Insurances Contributions. Don't worry they are very used to people moving from self employed to limited so this should only take a few minutes.

If your accountant has formed your limited company you will need to give them a quick call to explain your intentions so they can work out your new tax bands and thresholds.

How to set up a limited company

Once you have made your decision to form a limited company, the process of actually setting yourself up is usually very simple and can be as easy as entering a few details onto our website. You will need to include:

  • The director’s details – this will be you, and you will be responsible for the running of the business including managing the company bank account, dealing with issuing and chasing invoices, deciding how much of a salary the director can take from the business and handling dividends where appropriate.
  • Details of the company secretary – you can nominate a company secretary, but there is no longer a requirement to do so since a change in legislation which took place in 2006.
  • Details of any subscribers or shareholders – these are the people to whom dividends will be allocated from the company’s profits.
  • A company name – you will need to choose a name for your company which is not already in use. There are various considerations to be taken into account when choosing a company name which can vary depending on your industry, your specialism, any existing reputation you may have. Most people choose something that they hope will be memorable and easily associated with the work that they do, and you can check whether your chosen company name is available using online tools.

Once you have completed all the necessary fields, your company will usually be formed within three hours of submitting the details. You will receive all the paperwork you will need to complete other important tasks such as opening a business bank account as well as registering for VAT and PAYE. Using Easy Accountancy’s service to form your limited company is an ideal way to keep your costs down, meaning that you can set up your limited company for just £125 plus VAT. This includes everything you need to begin trading through your limited company as well as extra support on the most effective way to structure your business and help with any other aspects of the process which may raise questions for you.

Some people choose to register a limited company and then leave it dormant in order to protect their business name with no intention of trading through the company itself, which is a legitimate way of ensuring that nobody else uses your chosen name. You will need to inform HMRC if you intend to allow your business to remain dormant, file dormant accounts once a year and file an annual return with companies house to confirm the statutory details of your business such as the registered office address.

Running a Limited company

Trading

Beginning to trade through your limited company may seem like a daunting step, however not much will actually change. Your working day will remain the same, and you will continue to record all your ingoings and outgoings on an excel spreadsheet. If your client asks to see proof of your status of a limited company you'll be able to show them your certificate of incorporation to prove your new trading status.

Invoicing

You might need to update your invoice template if you have opened a new business bank account. It is important to remember that all of your outgoings are dealt with through your business bank account, now you are trading as a limited company. Ideally also you should keep a record of all invoices you have raised and when payment was received. This will help you keep track of your finances. If your looking for a new invoice template, why not download Easy's simple free invoice template here. 

If you have changed your bank account details, it's worth making your client aware of the change, so they update their accounting systems.

Paying yourself 

The money in your business bank account will be the company's money, so if you need to move any to your personal account, ideally you should speak to your accountant about the most tax efficient way to do it. Your accountant will be able to discuss your tax planning with you. Usually your accountant will plan your salary and any dividends. This will help your company maximise profits and save you money in tax.

If you have any questions or would like any further advice on moving from being self employed to becoming a limited company director, please call us on 0500 234111 or 01442 275767 or email heather@easyaccountancy.co.uk.

You may also find the following pages helpful if you are considering the move to limited.

Why Clients Choose Easy Accountancy

Easy Accountancy offers a low cost, fixed fee accountancy package with all clients receiving their own dedicated, friendly, approachable accountant.

All of our accountants specialise in providing accountancy services to the self-employed, freelancers, sole traders, small to medium sized limited companies and private individuals. All accountants are employees of Easy Accountancy and we never outsource or offshore work.

Our low cost, all-inclusive fixed-fee accountancy service includes unlimited access to your own dedicated accountant throughout the year and covers all your business and personal tax affairs needs.

All our accountancy services include:
  - Unlimited access to your accountant
  - Ongoing advice on how to manage your business
  - Proactive tax advice throughout the year
  - Updates and reminders so you'll never miss a deadline
  - Free bookkeeping software

As a sole trader our fees start at just £60 + VAT a month, for this you receive the above plus:
  - Completion of your Self-Assessment tax return
  - Advice on how much Income Tax to pay
  - Guidance on National Insurance contributions

As a limited company our fixed fee packages are bespoke to your needs, however typically you’ll receive the above, plus:
  - Completion of your year end accounts*
  - Completion and submission of your annual return Companies House
  - The director/s Self Assessment tax return
  - Payroll bureau
  - Dividends and corporation tax computations

We’ve saved our clients up to half on their accountancy bills – if you’d like a quote, click on the quote me button to the right of this page. Alternatively, call us on 0500 234111 / 01442 275767 or email heather@easyaccountancy.co.uk.

*If you would like us to complete your company year end accounts we simply ask that you have been a client of Easy Accountancy for one year or have made 12 monthly payments.