Setting up as Ltd Company
Discussion
Hi Folks.
Asking for some advice from the PH collective if I may. Withing divulging too much info, I'm currently employed 5 days per week in GP world, I'm about to reduce my contracted hours to 3 days per week and start doing Locum work throughout Scotland - I'm currently being offered more work than I can fit in, so am turning clients down which isn't what I want to do.
I need to set myself up as a ltd company for the locum work - can you advise on what this involves? Is it as simple as registering company, then doing an annual tax return so long as I keep accurate accounts or is there more to it than that.
If I get paid in the company name - can I withdraw the money as salary
Or can I get away with being a sole trader?
Thanks in advance.
Tim
Asking for some advice from the PH collective if I may. Withing divulging too much info, I'm currently employed 5 days per week in GP world, I'm about to reduce my contracted hours to 3 days per week and start doing Locum work throughout Scotland - I'm currently being offered more work than I can fit in, so am turning clients down which isn't what I want to do.
I need to set myself up as a ltd company for the locum work - can you advise on what this involves? Is it as simple as registering company, then doing an annual tax return so long as I keep accurate accounts or is there more to it than that.
If I get paid in the company name - can I withdraw the money as salary
Or can I get away with being a sole trader?
Thanks in advance.
Tim
Edited by scotlandtim on Friday 10th June 10:13
Chose a name for your company.
Check with Companies House that the name is available to you or is not too close to the name to an existing company.
Set up the company either directly at Companies House or use a company formation agent (the latter can be very cheap these days)
Once the company has been set up, register the company with HMRC for the following taxes
i) Corporation Tax
ii) PAYE (so you can administer any salary or benefits in kind the company pays to you)
iii) VAT - this may not be necessary in your case. A business needs to register for VAT if it expects its turnover to exceed £83,000 over a 12 month period. However, medical services such as those provided by doctors tend to be VAT Exempt - so even if the turnover of the company exceeds £83,000, you might not have to register.
Personally, you will more than likely have to register for Self Assessment so that you can properly return income you personally withdraw from the company. Salary would be covered by PAYE but dividends would need to be returned under Self Assessment.
Get an accountant.
There are a number of issues coming along that might affect your decision. It seems you are in Scotland. Over the next few years it is likely that taxation rules for individuals and companies in Scotland will start deviating from those in England and Wales. I would therefore recommend getting a Scottish based accountant rather than an English one.
The government has also announced that Self Assessment will be abolished in 2020 to be replaced by continuing assessment under the "Virtual Tax Account" system. heaven knows what that will entail or whether it will actually happen. HMRC themselves don't seem to know what they want.
You mention "Self Employment" - which is an option and one many doctors used to operate under. If you are going down the limited company route, check out what your professional body has to say about ethics etc in this regard.
Check with Companies House that the name is available to you or is not too close to the name to an existing company.
Set up the company either directly at Companies House or use a company formation agent (the latter can be very cheap these days)
Once the company has been set up, register the company with HMRC for the following taxes
i) Corporation Tax
ii) PAYE (so you can administer any salary or benefits in kind the company pays to you)
iii) VAT - this may not be necessary in your case. A business needs to register for VAT if it expects its turnover to exceed £83,000 over a 12 month period. However, medical services such as those provided by doctors tend to be VAT Exempt - so even if the turnover of the company exceeds £83,000, you might not have to register.
Personally, you will more than likely have to register for Self Assessment so that you can properly return income you personally withdraw from the company. Salary would be covered by PAYE but dividends would need to be returned under Self Assessment.
Get an accountant.
There are a number of issues coming along that might affect your decision. It seems you are in Scotland. Over the next few years it is likely that taxation rules for individuals and companies in Scotland will start deviating from those in England and Wales. I would therefore recommend getting a Scottish based accountant rather than an English one.
The government has also announced that Self Assessment will be abolished in 2020 to be replaced by continuing assessment under the "Virtual Tax Account" system. heaven knows what that will entail or whether it will actually happen. HMRC themselves don't seem to know what they want.
You mention "Self Employment" - which is an option and one many doctors used to operate under. If you are going down the limited company route, check out what your professional body has to say about ethics etc in this regard.
I have a number of businesses. I use 1st formations as it is cheaper than using companies house - £12 to start a business. Then get yourself a bank account - all as bad as one another imo. If you do private work you may want to think about accepting credit cards in which case lots of good deals these days to enable this.
Accounting is easy to do - use something like Xero or Kashflow (not as good as it used to be). That will handle all your invoices and expenses.
Xero has a number of plugins that may be useful to you as well (receipts are the biggest thing - take a picture of a receipt and enter it from your phone saves time and meas you stay on top of it). Get an accountant who will do you business accounts (they will have a Xero login to make life easy).
All the best
Accounting is easy to do - use something like Xero or Kashflow (not as good as it used to be). That will handle all your invoices and expenses.
Xero has a number of plugins that may be useful to you as well (receipts are the biggest thing - take a picture of a receipt and enter it from your phone saves time and meas you stay on top of it). Get an accountant who will do you business accounts (they will have a Xero login to make life easy).
All the best
Please also bear in mind the importance of being aware of IR35 and how it impacts on income paid into limited companies where the company is essentially just one director selling his skills on a "personal service" basis.
It has been discussed many times here on PH so it might be worthwhile reading through any threads on limited companies to get an idea of the issues.
It has been discussed many times here on PH so it might be worthwhile reading through any threads on limited companies to get an idea of the issues.
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