Moving from an Umbrella Company to a Limited Company

If you’re with an Umbrella Company but want the benefits of running your own Limited Company, then look no further; we can help (read more about umbrella companies here).  

The process is easy - all you need to do is inform your Umbrella Company that you no longer require their services, and then form your company on-line through SJD which is quick, simple and inexpensive. It takes five minutes to form a company and around 15 minutes a month managing your company affairs - not much work compared to the rewards.

Any accountant will tell you that working through your own limited company is the most tax efficient way of working. The bottom line is you’ll keep more of your hard earned money and be more in control.

How much more can I earn?

If you’re working through an Umbrella company you’ll typically be taking home 60% - 65% of your contract value, compared with around 75% - 80% through your own Limited Company. 

In addition, due to the Government’s Flat Rate VAT scheme, which enables you to keep a percentage of the VAT you charge your agency/client, you’ll make even more money, for example, a £50,000 contract over one year will be worth £1,700, while a contract for £100k will gain you £3,400. Plus, because you are saving to pay for your tax, you can also expect to make up to several hundred pounds a year in interest.

For more details on this please visit our new pages: Take home pay Limited company or Umbrella company - The Real Story and 'how much can I earn as a contractor?'.

Aren’t fees much higher?

Actually, accountancy fees are similar if not lower than those charged through Umbrella Companies. SJD’ accountancy fees are just £120 plus VAT per month; this is a fixed fee and fully inclusive service. Don’t forget that our charges are transparent and backed by a service guarantee. We are the appointed accountancy firm to over 15,000 contractors and have won numerous awards - so you’ll be in good hands.

Isn’t it complicated and time consuming running your own company?

The process below explains everything you need to know. You can move to limited at any point, even mid contract. Becoming a client and setting up your own company takes only a few minutes via our on-line facility, from then on we’ll work with you to manage your VAT and tax affairs.

Our fees are fixed and we’ll provide a proactive, prompt and efficient service; all we ask you to do is a small amount of monthly admin which typically takes no more than 15 minutes and we’ll do the rest, leaving you to enjoy the rewards from your contract work.

It’s no wonder that more contractors are running through their own limited company than ever before.

I’m inside IR35; surely it can’t be worth it for me?

If your contract and working practices look like you are inside IR35 you can still claim: traveling and accommodation expenses, 5% of your turnover, benefit from the VAT flat rate scheme, and receive interest on the funds held within your own company. So yes, from a financial point of view it still could be worth it. Also, any other contract work you do could also be put through your existing company. Download our free Guide to Expenses.

The only way to be sure whether your contract falls inside or outside IR35 is to have it reviewed by a specialist. SJD are one of only three firms in the UK who advise the Professional Contractors Group on IR35 and so are well qualified to give you the correct advice.

So what do I need to do?

The first thing you’ll need to do is form a Limited Company Using our Limited Company formation service though our website you can check name availability (free of charge) and fill in the details quickly and simply on-line.

Your company will be set up within two hours, and all documentation will be sent out by first class post within 24 hours. There is a one off charge of just £125 plus VAT, for setting up your Limited Company and includes opening a Company Bank Account, VAT/PAYE registration and advice on share structure (some companies charge extra for these).

What next?

Running your own Limited company isn’t difficult especially with the assistance of a good accountant. Your accountant* at SJD Accountancy will:

  • Help you understand the best way to take the most home from your contract.
  • Help you with all liaison and correspondence with HM Revenue and Customs as well as with Companies House.
  • Help you understand what you can and cannot claim.
  • IR35 advice.
  • Complete all accounts*, dividends, corporation tax calculations and your personal tax return.
  • Provide on going year round proactive tax advice.
  • Unlimited access to your own dedicated accountant* to answer any questions you may have.

The fee for this service is £120 plus VAT per month. There’s no minimum length of time you need to appoint us and there are no entry or exit fees.

So what is left for you to do?

  • Invoice your client/agency (we can help and provide you with a template).
  • Complete a very simple Excel spreadsheet, which should take about 15 minutes per month to fill in.
  • Manage your business bank account.

Review all of SJD's FREE plain English Guides, such as: Becoming a Contractor, Running your own Limited Company, Take Home Pay, Expenses, Step-by-step Guide to Contracting, Guide to IR35 (that you will be able to understand) plus lots more.

If you wish to appoint us as your accountants immediately, the quickest and easiest way to do so is by accessing our Client Agreement Form.

If you have any questions about contracting call our New Client Services helpdesk on 0500 152500 / 01442 275789 or email jessica@sjdaccountancy.com

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's Largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant* face to face.
  • Money back service guarantee. All your telephone calls and emails will be answered the same day or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee of £120 plus VAT per month.

If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com. Our new client services helpdesk is open Monday to Friday (8am to 6pm).

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own Limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.