Making the Move From Self Employed to Limited?

To make the switch from working as a self-employed individual to operating through your own Limited company, simply form your Limited company and then call HMRC to tell them that you have decided to change your company structure. You will also need to deregister as self-employed and stop paying self-employed class 2 National Insurance contributions – again a call to HMRC to deregister will get this sorted.

Then of course you will need to advise your accountant of the changes so that they can understand the new tax bands and thresholds they need to work to as a Limited company.  

How to set up your own Limited company

Setting up your own Limited company is very simple. To get started simply choose a name for your company – you will probably want to give this some thought, as you may have built up a reputation under a name you were using when you were self-employed or want to choose something which is particularly relevant to your industry. You can check the availability of a company name using SJD’s simple company name checker here.

Once you have chosen your company name, you can form your company online, which takes just five minutes on the SJD website, with your company set up the same day. You can visit our company formation page here or for peace of mind, if you would prefer to speak to someone, contact a member of our New Enquiries team who will be more than happy to assist you in setting up your company. Freephone 01442 275789 or email: newbusiness@sjdaccountancy.com.

Forming your Limited company with SJD costs just £125 + VAT, this includes:

  • Forming your company
  • Help setting up your company bank account
  • Registering your company for VAT and PAYE
  • Advice on the optimum share structure of your company.

Sure there may be cheaper alternatives available for setting up your company, however once you read the fine print, you may find yourself paying extra for setting up your company bank account, VAT and PAYE registration, all of which is included in SJD’s one off fee.

Running a Limited company

Trading

It is one thing setting up a Limited company and understanding the benefits that it offers, but actually beginning to trade through your company might seem like a more daunting step. Fortunately it is actually very easy to make the change in practical terms, and for some aspects of your working life, things will carry on in very much the same way as before. If you need to prove your status to any clients, then you will have a certificate of incorporation which you will be able to provide to them to confirm your new trading status.

Invoicing

Another change you will need to make is to invoice your clients using the details of your company bank account. You may have already had one of these when you were self-employed, but it is important to ensure that your income and outgoings are all dealt with through your business bank account once you are trading as a Limited company.  you should keep a record of all the invoices you have sent out along with when you received payment in order to keep track of your finances. If your looking for a new invoice template, why not download SJD's simple free invoice template here. 

It is often worth drawing your clients’ attention to the fact that your payment details have changed to ensure that they can update their accounting systems appropriately.

Paying yourself 

Moving money from your business bank account to your personal bank account is definitely worth discussing with your accountant. Tax planning will allow you to use your profits in the most efficient manner and ensure that you are paying tax at the appropriate rate, but to take advantage of the benefits of trading as a Limited company you should plan your salary and any dividends you might wish to draw from the business. Your accountant will be able to advise you on the best way to manage your finances to ensure that you are able to maximise your profits. 

For more information on switching from self-employed to Limited, along with the advantages and disadvantages of going Limited, the tax differences when moving from self-employed to Limited and how much it costs forming your own Limited company, visit our easy to read guides here:

If you have any question about going Limited or would like any further advice please call our New Business Team on  01442 275789 or email newbusiness@sjdaccountancy.com

You may also find the following guides useful: