ICS Accounting FAQs
Please take a moment to look at our most frequently asked questions. If you have further questions, please do not hesitate to talk to us online or contact us by calling 0800 195 3750.
Is a limited company right for me?
When working as a contractor, you are able to take home a greater percentage of your monthly income, however, in order to do so, you need to make the right decisions on how to achieve it.
If you make the wrong decision, you could end up facing both a mound of paperwork and even a fine from HMRC. Get it right and you’ll be able to enjoy greater take home income knowing ICS are looking after the administrative tasks.
ICS specialise in offering contractor services such as individual accounting, tax and administration services to allow contractors to enjoy the benefits of working as a contractor.
ICS will never pressure you into making a decision regarding our services, believing the best way is to present you with the facts to allow you to make your own educated decision.
Should I choose a Limited Company or Umbrella Company?
If you are outside of IR35, a limited company is often the most suitable option as you will generally take home a greater income each month compared to an umbrella company as you are eligible to benefit from a flat VAT rate as well as lower National Insurance contributions and the ability to claim back tax on a wide range of expenses.
We strongly recommend contacting us for a discussion and an individual quote based on your specific circumstances.
Please give us a call today and discuss with us your individual circumstances as well as taking advantage of our free IR35 review which could assist you with your decision making. Call our team today on 0800 195 3750 or email email@example.com.
Should I go solo or work with an accountancy company?
If you opt for the option of forming a limited company, you firstly need to decide whether you’re going to run it on your own or work alongside a company such as ICS. If you go it alone, you may have fewer fees to pay, however you will certainly have a mountain of admin work on a regular basis.
A significant number of contractors will choose to work with specialist contractor accountants because it gives them the time to enjoy their work and family life without having to stress and worry over invoicing, taxation, IR35 and many other legislations. Why worry yourself when you can let a professional handle it for you?
Which limited company service provider?
The question of which limited company service provider should you use is one which can be answered in many ways, and there is a wide range of companies who can assist with this. However, it is far more beneficial to employ the services of a specialist in contracting work to ensure you are always compliant with current legislation.
Each provider offers slightly different services and options and, as such, making an educated choice can often be difficult.
Why set up a Limited Company?
Choosing to form a limited company with you as a director and shareholder is generally the most tax effective way to work and comes with a range of advantages.
- You will retrain full control over your finances
- You can protect your company name so no others can use it
- You will give both suppliers and clients a sense of confidence
Running your own limited company does not have to be difficult and, when working alongside our dedicated and experienced team, it is just as simple as trading in any other way, yet there is a significant range of benefits which can be had from opting for this solution.
How do I get started?
If you’ve decided to operate under a limited company, ICS will allocate you your own personal account manager who will be on hand to guide you step by step through the application process and give you guidance and advice on any questions which may arise.
What is IR35?
IR35 is a legislation which was rolled out in 1999 to eliminate the avoidance of income tax and National Insurance contributions by using the likes of personal service companies in cases where a contractor would be regarded as an employee for tax purposes.
What is the Flat Rate VAT Scheme?
In 2002, HMRC rolled out flat rate VAT to reduce the paperwork for small businesses that had to account for VAT. If a limited company turns over less than £150,000 per year (excluding VAT), they will be eligible for this scheme.
Contractors are able to charge clients a flat VAT rate of 20%, however when they come to reconcile VAT, they will pay HMRC a percentage of their turnover as opposed to having to calculate VAT on each and every purchase.
You will be able to significantly reduce your VAT bill through the flat rate VAT scheme.
What are the financial benefits?
- You are able to claim on a wider range of business expenses
- You have a greater opportunity for tax planning
- You will be eligible for the flat rate VAT scheme
- You will be able to have faster payment and administration processes
What are my responsibilities?
As a director of a limited company, you will have certain responsibilities to undertaken which includes registering with companies house and submitting annual returns.
Your company must have at least one director whose role is to ensure that the company is being run in accordance with the law. If you have any questions regarding your responsibilities, please do not hesitate to speak with your account manager at any time.
Can I pay myself dividends?
As a director, you are eligible to pay yourself dividends on the net profits of your limited company. Your dividend income is not subject to National Insurance contributions and, if you are a basic rate tax payer, there is no further tax to pay on this income.
Above and beyond the basic rate tax threshold, you will pay a flat rate of 25% on dividends.
What expenses can I claim?
When it comes to claiming business expenses through your limited company, ICS will provide you with an expenses claim form and a policy which will highlight the most common expenses you can claim for.
Please note that when operating as a limited company, you must record all necessary expenses and you must keep all receipts and submit them in a timely manner.
What insurance will I need?
Taking out comprehensive insurance is a wide move for any business and, within our popular Plus and Pro services, we will provide you with the following:
- Employers’ Liability insurance up to £10,000,000
- Public Liability insurance up to £5,000,000
- Professional Indemnity insurance up to £2,000,000
What if I decide to go permanent?
In this instance, ICS can assist you in closing your business. Alternatively, you are able to leave your company dormant in case you return to contracting at a later date and we will handle the necessary administration for you.
If I stop contracting, do I still have to pay?
Unfortunately yes you do due to the fact that our fees are based on a fixed annual amount for the work undertaken; something which is agreed in advance when you sign up. Rather than taking a lump sum payment at the start of the year, this is broken down into monthly instalments.
How do I open a bank account?
ICS will be able to provide you with all the details needed to open a company bank account unless you have already set one up.
Do I need to register my company for VAT?
You must register for VAT if your taxable turnover reaches more than £67,000 within 12 months.
If your taxable turnover is greater than £67,000 per year, you must register yourself for VAT. At ICS, we will include your VAT application as part of the service and submit quarterly VAT returns for you.
Will I need to complete a tax return?
The UK tax year runs from April 6th to April 5th the following year and you must submit a tax return for this period. If a tax agent lodges your self assessment for you, you have until January 31st of the following year to pay tax which is owed.
To ensure the correct completion of your Self Assessment Tax return, we will provide you with the following information:
Under our premium service, we are able to complete your tax return on your behalf.