IT Contractor Tax Limited Company Accounts Accounting

IT Contractor Insurance
Professional Indemnity insurance for contractors + public and employers' liability cover - try Hiscox.

How do I switch from an umbrella company to a limited company?

Posted Feb 2, 2011

If you have decided to move from your umbrella company scheme and start contracting via your own limited company, there are a number of steps you will need to take to ensure this changeover goes smoothly.

Your decision to switch company structure could be for a number of reasons. We have covered the limited or umbrella? question in a dedicated article on the site.

In theory, the switching process should not be complicated. After you have given notice to your umbrella company, your umbrella should reimburse you for any salary and expenses you are owed. Your umbrella company should also issue you with your P45 as you will soon join the payroll of your new limited company.

You can concurrently set up your new limited company, and hire the services of a specialist contractor accountant.

Timing your switch

However, complications may arise if you decide to switch business structures mid-contract.

If you switch mid-contract, new contracts will need to be signed between you and your new limited company and your recruitment agent (or end client). This should not prove to be a problem, but both your old umbrella company and your agent (or end client) will need to agree to this. If you are working direct, you may need to explain the situation to your client.

You should also check the terms and conditions of your current umbrella company service, as there may be penalties, or a notice period.

Further Information

Most importantly, you should first read our guide to choosing between an umbrella company or limited company before switching business structures, as there are a number of considerations to take on-board before changing.

If you have decided to move structure, try our guide to setting up a contractor limited company, and our tips on how to choose a good contractor accountant.

| ©Contract Eye Ltd. Protected by Copyscape. Please scroll down for related articles.

Contractor Services


Related Articles

Limited companies - what are the Articles and Memorandum of Association used for?
We look at two of the documents required when you set up a company, with particular reference to the Articles of Association.

IT contractors - what is a limited company?
Most IT contractors work via a limited liability company. So what is a limited company, what are your responsibilities as a director?

Forming a limited company - which documents do you need to complete?
Contractors thinking of going into business for the first time may be daunted by the thought of forming a limited company. However, in reality, the company formation process is not complex.

As a company director, can I keep my home address private?
Following the introduction of the Companies Act 2006, limited company directors can provide a 'service address' to appear on the public record, and keep their residential address private.

Limited company dividend vouchers and board meeting minutes
A limited company must record its intention to issue dividend payments via board meeting minutes, and issue each shareholder with a dividend voucher. A simple guide to getting the paperwork right.

How to change the name of your limited company
At some stage during your contracting career, you may decide that you would like to change the name of your limited company.

Limited company contractors - what are dividends?
A guide to dividends for contractors and small businesses. How to calculate them, when to distribute them and what paperwork you need to complete.

Guide to setting up a limited company
How to set up a limited company for your new business. What are the legal requirements?

Contracting via a limited company - advantages and disadvantages
We look at the advantages and disadvantages to contracting via a limited company, the most tax efficient way to contract.

Contractor limited company naming tips
If you have decided to contract via your own limited company, one of the first tasks you need to do is choose a suitable name for your new enterprise.

How to incorporate a limited company
If you are thinking of contracting via your own limited company, there are typically three ways of incorporating your new company.

Your duties and obligations as a limited company director
If you are a limited company contractor, there are a number of duties you must perform by law as company director. You also have several financial and legal responsibilities which you should be aware of.

Choosing a name for your limited company
If you want to set up as a limited company contractor, there are some things you should look out for when selecting a company name.

How do I switch from an umbrella company to a limited company?
Moving from an umbrella to limited company structure should be a hassle free process - here are some things to bear in mind before making the move.

Companies House and limited company contractors
Limited company contractors will communicate with Companies House in a number of ways each year, from submitting their annual returns, to providing company information updates.

Qdosconsulting

Looking for a new service provider?

Accountants
Umbrella Companies