Tax Investigation

Go Limited - An Easy Guide to Understanding Dividends for Limited Companies

Go Limited - How to Handle HMRC Investigations Without Stress as a Contractor

Go Limited - 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.

Go Limited - Our Contractor's Guide to Corporation Tax Deadlines There's no denying that setting up a limited company for contracting is a big responsibility, especially when it comes to keeping on top of tax. Not only do you need to think about paying Income Tax as a self-employed contractor, you need to pay Corporation Tax as a business. Tax deadlines might not be the first thing on your mind when you're running a business, but they can't be overlooked. In fact, keeping on top of Corporation Tax obligations is one of the most important responsibilities of a company director. Missing a deadline doesn't just mean paperwork headaches and stress, it can also lead to hefty penalties, added interest charges and even HMRC scrutiny. That's why, at Go Limited , we're here to help. We've broken down exactly what you need to know about Corporation Tax, the deadlines to remember, the penalties for getting it wrong and strategies to make compliance simple. Limited Company Contracting: What is Corporation Tax? When you own a business in the UK, you need to pay attention to a lot of things, such as IR35 and HMRC regulations, but Corporation Tax is the big one. This is a tax that's charged on the profits that your limited company makes. Whereas Income Tax is a personal tax that employees and self-employed individuals pay on salary and dividends, Corporation Tax is paid by the business itself. It's calculated based on the income your business makes from providing services - as a contractor, this means your contracting work - and any investment income your business earns. Chargeable gains are also factored in, which is important if your business sells assets, such as equipment or property. All of this is added together and Corporation Tax is calculated based on the total, minus allowable expenses that you're allowed to deduct. Whereas employees have Income Tax deducted automatically though PAYE, limited company contractors are responsible for working out how much Corporation Tax is due. You need to report it to HMRC and pay it on time. This is done via a Company Tax Return. Corporation Tax Rates Limited Company Contractors Need to Know There's a tiered system of Corporation Tax rates and, as a contractor, it's important to know where you fall. If your limited company's annual profits are £50,000 or less, you have to pay the small profits rate of 19%. If your profits are more than £250,000 then you fall into paying the main rate of 25%. There's also a marginal relief rate which applies for profits between £50,001 and £250,000, and it gives a tapered increase from 19% to 25%. Don't assume that you'll always be on the small profits rate, as all it takes is one lucrative contract and your profits could be higher than expected, meaning you have to pay a higher rate of Corporation Tax. This is why it's important to regularly review your earnings, so you don't get caught out with a bigger tax bill than planned. Corporation Tax Penalties and Interest There are strict deadlines for Corporation Tax and missing a key payment date can result in penalties and interest , so it's no laughing matter. It's not a small mistake to make, as it could cost you greatly in terms of stress and fines, not to mention the inconvenience of adding something else to your plate. HMRC enforces strict penalties and these increase the longer the delay. So, if you do miss a Corporation Tax deadline, it's important to pay as soon as you can. If you file your Corporation Tax Return late, you will be given a fine of £100, even if it's only 1 day late. If it remains unfiled for 3 months, another £100 fine will be added. After 6 months, HMRC estimates your tax bill and adds a penalty of 10% of the unpaid tax, with another 10% being added if your Corporation Tax isn't sorted after 12 months. All of this quickly adds up, making your Corporation Tax bill significantly higher than it would have been had it been paid on time. HMRC can apply harsher penalties if you're a repeat offender. For example, if you consistently file late - which HMRC considered to be 3 times or more in a row - the £100 fines increase to £500 each. Key Corporation Tax Deadlines for Contractors As a limited company contractor, there are two key Corporation Tax dates you need to remember. Corporation Tax Payment Deadline You need to pay Corporation Ta x no later than 9 months and 1 day after the end of your accounting period. Company Tax Return Filing Deadline You need to file your Corporation Tax Return within 12 months of your accounting period ending. If you're a new contractor, you need to register for Corporation Tax within 3 months of starting to trade. HMRC will not remind you, and it's your responsibility as a limited company director to remember.

Go Limited - Step-by-Step Guide to Setting Up a Ltd Company There's something alluring about setting up a limited company as a contractor, something that pulls you in with the promise of freedom, flexibility, tax-efficiency and cost-effectiveness. But, to enjoy those benefits, you first need to set up a limited company. Though setting up a limited company isn't the time consuming and daunting task a lot of people assume it to be, it's not as easy as quickly filling out a form and being on your merry way. At Go Limited , we know that setting up a limited company can be simple and straightforward, but only if you know what to do. To guide you through the process, we've created this helpful step-by-step guide. Starting a Limited Company: Is a Limited Company Right for You? Setting up a limited company for contracting can be a great way to take your business to the next level, but it's important to understand the process and what's involved. From deciding whether it's the right move for you to officially registering your limited company, there's a few key steps to follow. Before you register a limited company, take some time to weigh up whether contracting through your own company aligns with your long-term, ongoing business goals . Many freelancers, contractors and small business owners eventually choose the limited company route because of the protection and credibility it offers. But, running a limited company also means taking on a few extra legal and financial responsibilities, so it's important to understand both sides before making the switch. The Advantages of Setting Up a Limited Company for Contracting There are several benefits that come with setting up a limited company, and understanding these is key if you want to decide whether limited company contracting is right for you. 1. Limited Liability Protection - As a company director and shareholder, your personal assets are separated from your business finances. That means that if the company faces financial trouble or legal action, your personal property and savings remain largely protected. Your liability is limited to what you've invested in the business. 2. Professional Image - Operating as a limited company can make your business appear more established and trustworthy, and it helps to build credibility within the industry. Clients, investors and suppliers often prefer working with limited companies because they project stability and professionalism, which gives you an edge in competitive markets. 3. Tax-Efficency - Limited companies benefit from different tax structures compared to sole traders and self-employed freelancers, giving you the freedom to operate in a more tax-efficient way . Instead of paying Income Tax on all of your profits, your business pays corporation tax, which works in a slightly different way. You can also choose to take some income as dividends, which are taxed at a lower rate. Are There Any Downsides to Starting a Limited Company? Setting up a limited company for contracting comes with added administrative duties and responsibilities. You'll need to file annual accounts and tax returns with HMRC and Companies House, keep accurate business and financial records, and follow company law and reporting requirements. Before deciding if setting up a limited company is right for you, you need to consider whether the added compliance is worth it for your business size and goals.

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