Simple Sole Trader Setup Guide

Keep your limited company compliant by separating personal and business finances. Understand what to keep separate and how to manage accounts correctly.

Avoid costly expense management errors. Learn the common mistakes, how to fix them and how to keep your contractor finances organised and compliant.

Discover the key benefits of hiring an accountant or bookkeeper for your business. Save time, stay compliant, improve accuracy, and keep your finances on track.

An Easy Guide to Understanding Dividends for Limited Companies

How to Handle HMRC Investigations Without Stress as a Contractor

How to Manage Cash Flow When Running a Limited Company There's a lot to do when you have a limited company to run, but don't let cash flow management fall behind. It's there to ensure that your business has enough cash to operate smoothly and it's vital for contractors, not just for survival, but for growth. At Go Limited , we know that managing cash flow can seem complicated, but it really isn't. Once you understand the ins and outs of cash flow - and why managing it is so important - you'll be on your way to building a financially healthy business. Understand Your Limited Company Cash Flow Cycle When we're talking about cash flow, we're talking about the movement of money in and out of your business. Money flows in when an invoice is paid by a client, and money flows out when you have expenses, wages, overheads and raw materials to cover. There's a lot that goes into setting up a limited company , but understanding your cash flow cycle is an aspect that's often overlooked, despite it being a hugely important part of the financial side of things. Your Limited Company Cash Flow Cycle Will Typically Include: 1. Invoice Creation and Submission - As a limited company contractor, you will usually invoice clients weekly, fortnightly or monthly. The timing of these invoices has a direct impact on cash availability. 2. Client Payments - Payment terms affect when money enters your account, as it gives clients a timeline for paying an invoice. Late payments are a common cause of cash flow stress, which is why having clear payment terms and chasing client payments is key. 3. Operating Expenses - It's hard to run a business without any operating expenses. Outflows including salaries, rent, utilities, taxes, pensions and insurance all need to be taken into account. These need to be timed against incoming cash to avoid gaps. 4. Profit Distribution or Reinvestment - After covering business expenses, money can be retained for growth or paid out as dividends, which will be reflected in your cash flow cycle. Mapping your cash flow cycle helps you to predict financial shortages and make proactive decisions about the money in the bank, rather than reacting to crises at the last minute and hoping for the best. It's an important part of growing a successful business and advancing your career . Limited Company Cash Flow vs. Limited Company Profit Though they are often spoken about together, cash flow is different to profit . Profit shows whether your business is financially healthy on paper, whereas cash flow looks at whether your limited company can meet its short-term financial obligations. Why is Good Cash Flow Management Important for Contractors? Cash flow management isn't something you can overlook, especially as a contractor running a limited company. As your income is likely to vary from one month to the next, and client payments can be inconsistent, keeping on top of the money flowing in and out of your business is vital. Otherwise, you'll quickly find yourself facing operational problems and day-to-day spending challenges, even when your profits look healthy on paper. Key Reasons Cash Flow Management Matters for Limited Companies: When you prioritise cash flow management as a limited company contractor, you ensure bills and salaries are paid on time. It's a lot easier to avoid late fees and maintain good relationships with employees, subcontractors and suppliers when everyone is paid on time. It's also a key part of supporting business growth. When your cash flow is under control, you can decide how to invest in training, new equipment or marketing to attract better clients, without putting your business at risk financially. Plus, knowing when money is coming in and going out makes it easier to make confident business decisions, reducing stress and uncertainty. The Risk of Not Managing Limited Company Cash Flow Failing to properly manage cash flow when running a limited company doesn't just make things difficult from an organisational standpoint, it also puts your business at risk of late payments, penalties, damaged reputation, insolvency and reliance on short-term credit. 1. Late Payments and Penalties - If you're not managing your limited company cash flow correctly, you could end up missing tax deadlines, VAT or supplier payments, all of which can incur fines. 2. Damaged Reputation - It doesn't look good when a business pays people late. Late payments to suppliers, subcontractors or staff can harm long-term business relationships. 3. Reliance on Expensive Credit - If you need money quickly, you might find yourself relying on short-term credit. High interest borrowing might be necessary if cash flow isn't managed, but it's expensive, which reduces your business' profitability. 4. Risk of Insolvency - Running out of cash can force even profitable businesses to close temporarily or permanently, and it's hard to come back from that. It can set your contracting back in a big way. As you can see, cash flow management is non-negotiable for limited company contractors.

A clear contractor guide to Corporation Tax deadlines for limited companies. Learn key dates, filing rules, and how to stay compliant and avoid HMRC penalties.

A simple, step-by-step guide to setting up a limited company in the UK. Learn the requirements, costs, and key steps to register and run your business.

Learn how to set up a business bank account for your limited company. A clear guide for contractors on requirements, documents, and choosing the right business account.