Starting up your own company
We recommend to the vast bulk of our clients to set up their own limited company to save on tax and NI, thereby maximising their take-home remuneration.
If operating outside of IR35, we recommend that our clients take a small salary and take the rest as dividends. Dividends can be taken as often as you like and are NI-free and attract lower tax – this saves a typical contractor several thousand pounds each year.
We can set up a company the same day, help you open a company bank account, register you for PAYE scheme and VAT – all you need to do is have a company name in mind and supply us with your details.
When forming the company we subscribe for 1 share only as the default – that way you will be 100% shareholder and be entitled to all of the dividends issued. If you would like any more shares to be issued eg to “share split” with your spouse, let us know and we will arrange that for you.
Most clients appoint themselves as the director and do not bother to appoint a company secretary as there is now no legal necessity to do so. If however you would like to appoint one, most clients appoint their spouse/partner/family member.
Your home address can be used as the Registered Office address and most of our clients use their home address.
Once the company is formed you will need to speak to your new company’s client (typically an Agency) to organise a contract.
We also advise you set up business insurances to lessen your commercial risk and to strengthen your position from an IR35 viewpoint -we strongly recommend you set up business insurances before you commence work on a contract. For business insurance we recommend QDOS, a professional insurance broker. contact them on forbesyoung.qdosconsulting.com, quoting Forbes Young.
To summarise, to form a limited company and operate outside of IR35 is the best way to maximise your take home remuneration, whether the take-home total after tax is 80%, 75% or 70%. This all depends on how much income your company generates and how many expenses the company incurs and the timing of your dividends.
Click here to download our free Ultimate Contractors Guide