What are the Advantages of Running your own Limited Company

Running your own limited company can sometimes be beneficial in terms of tax. Any contractor who passes the IR35 test, should consider managing their own limited company.

• If IR35 does not apply to your contracts, then you could be paying less tax.

Increasing net pay is the key benefit when deciding whether to go through all the hassles involved in setting up and running your own limited company.

If you're a contractor who is just getting started, you'll be thinking about how you want to trade. All contractors have to work through a limited company, of some description - 'limited company' status comes in a variety of ways.

There are two ways to trade through a limited company:

1. Setting up your own personal limited company, or
2. Using the services of an umbrella company

The Umbrella Company Service Works

An umbrella company is the best method of trading through a limited company for most contractors. Though, for a small minority of contractors, an umbrella company may not be the best option.

Setting up and managing your own limited company could be the right choice for a contractor who passes the IR35 test.

Contractors should do a bit of homework first:

1. To start off, research more about the responsibities of running your own limited company
2. Consider your lifestyle. Do you have the time to spend hours dealing with red-tape?
3. Check out how an umbrella company helps with your paperwork

Umbrella companies are easy to understand, especially if you read our guide new to umbrella companies. Just take a little time to read through the basics and stay away from the administration trap that is your own limited company. How to choose an umbrella company.