Setting up your own limited company when you are contracting and freelancing can be a bewildering experience. The initial thoughts for many are that it is simply too complicated and that it requires too much time, money and patience. Whilst it is true to say it takes a bit more of all three than perhaps not setting up your own limited company, any burden can be greatly reduced by partnering a good accountancy firm first and foremost, but also by understanding the following process:

1. Plan ahead and think clearly about what you want to call your company. Many contractors and freelancers simply use their names but as you can appreciate there are a lot of registered limited companies in the worlds 5th largest economy. You may want to choose a name that better reflects what you offer and if that’s the case you may need a few different options. Its also worth thinking about the long term, is this a company that you might one day grow beyond just yourself and would the name you have in mind now still work then.

2. Think about what you might turn over in your first year. It might sound ridiculous but everyone you speak to from the accountant to the bank to HMRC will want some idea or projection and there are certain implications if its above circa £80k that you would really want to have to avoid dealing with later. This will also help your accountant plan the most efficient way for you to manage your income.

3. You are going to need a new bank account for your limited company since it will be a separate entity from you as a person, even if the company is ‘your name’ ltd. You are limited with this until point 1 has been completed as you will need to have your registered company number before the bank can look at your application. They would almost certainly want you to meet with them face to face (even though its now 2016) which can take a while to organise and will have to be a week day. With this in mind you should try to be mindful of this and plan accordingly. Once the bank agree to open the account it can normally take a week or so before you get the account number which you will need to add to your invoices.

4. As your accountant starts to register you for taxes you will start to receive all sorts of codes and correspondence. Its important that you forward basically anything from Companies House or HMRC over to your Accountant as soon as you receive them (unless you plan on doing your own taxes) and then everything can be set up properly from the start.

5. And finally get yourself some decent accountancy software. You may ask why you would need to do this when you are paying an accountant. Well accountants are clever people but are limited by the amount of information or they have to work with. By keeping accurate up to date records of your invoicing and expenditure, you are allowing the accountant to be able to work constantly with the data in your company. If you want to know how much can be drawn out of the company, what your tax liabilities are or if you need your quarterly VAT return done , this will require up to date information. Most accountants work with cloud accounting software now and should be able to make a suggestion that suits your circumstances.

6. Enjoy the freedom and flexibility of becoming your own boss and master of your own destiny!