First of all, let’s make one thing perfectly clear: setting up a limited company involves a great deal of responsibility. Although you’ll certainly be free of the restrictions and frustrations of everyday employment, you’ll also be free of the financial security and overall stability that usually comes with it. When you’re enjoying the luxury of working for yourself, you’ll suddenly be faced with an increased sense of financial responsibility.
However, the journey to self-employment has been a successful one for so many Brits. According to the latest ONS figures, there are currently around 4.8 million self-employed workers in the UK, a figure which now accounts for just over 15% of the entire labor force. In fact, the House of Commons Business statistics shows there are currently 1.9 million registered limited companies across the country, with 891,000 of these operating as one-person businesses.
Since so many of these SMEs have gone on to achieve great success, you’ll undoubtedly be hungry to follow their lead. Of course, before you do that, you’ll need to learn more about setting up a limited company and how you can really reap the rewards of this structure.
Consider Your Working Options
The beauty of self-employment lies in the fact there are so many options available to you. Whether you’re dreaming of making more money, achieving a better work-life balance, or something else entirely, you need to do your homework and make sure you’re choosing the right option for your needs.
For example, while a limited company provides you with limited liability and increased take-home pay, it also involves a huge amount of responsibility and commitment. If you’re more of a casual freelancer, you may want to consider setting up as a sole trader instead, since this makes it much easier to get started and typically involves much less paperwork.
Although you may have your heart set on working for yourself, that doesn’t necessarily mean you have to go down the limited company route. Before taking the plunge and registering at Companies House, you need to weigh up all your options and decide whether working as a limited company, sole trader or umbrella company is best for you.
Even if you do decide to set up as a limited company, you still have to choose between becoming a Private Limited Company (LTD) or a Public Limited Company (PLC). After all, even though the majority of people go down the LTD route, you may find that your particular business could become more profitable as a PLC.
Develop a Strong Business Plan
This may sound like the most obvious piece of advice possible, but a frightening number of limited companies are set up without an adequate business plan in place. Ultimately, without writing down an extensive plan for your company, you simply don’t know if there’s a market for the services or products you’re providing.
A comprehensive plan will include everything from company targets and goals to extensive market research and financial projections. Once you have this in place, your business will inevitably become much more structured, driven, and, above all, successful.
Pick the Right Company Name
Before getting completely carried away with branded stationery and a sparkly new website, you need to make sure that your company name isn’t taken by another registered business. The last thing you want is to spend huge amounts of time and money on designing a new logo, only to realize that your chosen name is taken and you’re going to have to start all over again.
When setting up a limited company, you need to register your company (including its name) at Companies House. Not only does this secure your chosen name and prevent someone else from stealing it, but the process also provides you with a certificate of incorporation—which lends a certain sense of credibility to your business as a whole.
Coming up with the perfect name for your business is never an easy task, especially when your first choice might already be taken. However, by opting for something simple and unique, which also reflects what your company has to offer, you’ll be taking your first steps towards creating a truly memorable brand.
Get a Specialist Accountant
Due to the sheer amount of financial responsibility involved, some people can quickly become overwhelmed by setting up a limited company. From keeping on top of important deadlines to claiming allowable expenses, running a limited company will always entail vast amounts of paperwork.
When you have minimal experience in managing your own finances, this paperwork can quickly seem incredibly confusing, while also hampering your productivity and distracting you from doing what you do best. More importantly, a lack of expertise in this area will inevitably lead to missed deadlines, damaging penalties and reduced profitability.
The financial benefits of becoming a limited company are vast, but you can only make the most of these benefits by keeping a firm handle on your accounts. By hiring a specialist accountant, you can make sure that your finances are always properly looked after, and ultimately help your business become as profitable and successful as possible.