Limited Company for Contractors
Limited company is a business structure that offers some considerable financial advantages. However, it also entails some responsibilities.
Employing limited company for contractors is one of the purposes of running a company.
Before an individual can understand the concept of limited company for contractors, it is ideal to understand first the legal perspective of a limited company. Just like any other business structure, the limited company can do everything such as spending money, borrowing money, contracting for services as well as pay for taxes. On the other hand, the advantage of this business structure is that the personality responsibility is limited. This means that the personal assets are separated from the company’s assets. In this sense, whatever undertakings made by the company is the sole responsibility of the company and not the person. However, the law requires that the company should be managed responsibly and legally.
Limited company for contractors means that a member of the company works as a contractor for the company. In this sense, it follows that the contractor carries responsibility with the company. That is why it is necessary for the contractor to know the responsibilities. One of the responsibilities when contracting with other companies is to set up account for the company. You should keep in mind that although you are contracting in behalf of your company you cannot receive the payment or income in your name.
Another thing to consider with limited company for contractors is the invoicing and the taxes. As much as possible you should request for signed timesheet from your clients as you will base your invoice from the timesheet. Likewise, this business structure offers financial advantage in terms of taxes because the VAT spent by the company can be refunded. In addition, as a contractor for a limited company you should be knowledgeable in handling expenses. You should ensure that all the receipts of contracting expenses are all kept. You can use the receipts if you want deduction from your taxes. On the other hand, you can reimburse the expenses incurred from the account of the company to cover the amount you paid.
Moreover, keeping the books is crucial for contractors of limited company. it is the responsibility of the contractor to settle the company’s account as the year ends as well as the tax return of the company. That is why from the start of the transaction you should ensure that all the financial records are intact. In this way it would not be difficult for you to prepare the accounts. In addition, a limited company contractor can enjoy several benefits such as maximizing your earnings as you will be granted tax-efficiency. You are also protected form legal obligations of the company and there is unlimited opportunity to find clients.
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