Fees
Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of "de Finibus Bonorum et Malorum" (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, "Lorem ipsum dolor sit amet..", comes from a line in section 1.10.32.
The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.
The prospect of a setting up and managing a limited company, for anyone new to contracting, can at first seem to quite overwhelming. That being said, it is the most common method used by IT contractors to manage their earnings and with a little knowledge it is usually fairly straightforward.
Up until recently, forming a limited company was by far the savviest method for contractors to manage their finances. However, the introduction of legislation called IR35 has, for many contractors, removed the tax advantages of owning a limited company. Determining whether you fall outside the IR35 rules or not will enable you to make a decision as to whether setting up a limited company or using an umbrella company makes the most financial sense.
Setting up a limited company
A limited company allows a contractor to sign contracts with agents and handle finances flexibly. By forming a limited company you are essentially setting up your own business and putting yourself in charge of your own earnings and accounts. The company will be a separate legal entity to yourself, which means that you, the director, aren’t liable for the company’s debts should the company fail.
Tackling accounts alone is not recommended and by hiring an accountant it is possible to be sure that all legal obligations are being met. An accountant will also be able to offer guidance through the process of setting up a limited company. Further in this article you will find advice on choosing an accountant.
Forming a limited company is simply a matter of filling out an application form found on the Companies House website. The information that this application requires is as follows:
- Registered address – this can either be the contractor’s trading address (i.e office or home) or the accountant’s address.
- Company name – choosing a company name needs to be done carefully. It is important to check that the name is not already taken by another company, which can be done via the Companies House website. The name must also feature the word “limited” or “ltd” at the end.
- Company officers – the company will require at least one company director and a company secretary (a secretary is not necessary for private limited companies)
- Capital and initial share information – it is necessary to choose the type, value and number of shares. It is actually possible to start a limited company with as little capital as 1p, but it is advisable to start with at least £100.
- Shareholder details – the contractor may be the only shareholder, but the details still need to be included in the application.