Working as an agency nurse or locum doctor offers plenty of positives. From the flexible hours to learning a wide range of skills in a variety of settings, both roles are career paths with much to offer.
There are plenty of advantages to setting up your own limited company (also known as a personal service company) too, not least that it is one of the most tax-efficient formats for carrying out agency work. So combining the two makes perfect sense, right?
Why set up a limited company?
Working through a limited company means you avoid falling into the ‘self-employed’ bracket. The limited company acts as an additional buffer between the employer and the employee, preventing the need for a working relationship and allowing the contractor to work on an as-needed basis.
How to set up a limited company
Setting up a limited company is straightforward and can usually be completed in a couple of hours by following these six simple steps:
Here’s your chance to be as creative as you want. Choosing the right name for your limited company is important as it is the title through which all your business will be conducted. It’s important to remain professional and select a name that is memorable.
Consider referring to the line of work you are in, the service you provide or the location in which you operate. Alternatively, use your name, initials or a memorable word or phrase. Some limited company owners have even been known to use random name generators. Whatever you choose, ensure it is a name that is simple to read and can be easily communicated over the phone.
While there are few limits on the title you bestow upon your company, there are one or two guidelines. Once registered with Companies House, your limited company’s name must incorporate the word ‘Limited’ or ‘Ltd’, (e.g. Agency Nurse 101 Limited or ABC Nursing Ltd).
Also, avoid names that contain foul or inappropriate language. While selecting a controversial moniker might seem funny, your professionalism may be called into question. What’s more, it’s likely to be rejected when you come to register your company.
Before registering, establish whether the name you have chosen is unique. This can be done via the Companies House website. It’s worth checking whether you are able to obtain an email address or web domain of the same name, too. These details will help improve your company’s professional appearance.
Step two – Choosing a company address
For legal purposes, your limited company requires a permanent address. You are permitted to use your home address, providing it is located in the same country in which your company is registered. And don’t worry, if you move house, the address of your limited company can be changed through Companies House by completing form AD01.
If you do opt to use your home address, it is worth noting that Companies House places all registered office details on public record.
Alternatively, non-residential registered office addresses are also accepted.
As your limited company will be an officially recognised business, a director must be appointed and company shares distributed to shareholders.
As the company’s founder, you can act as both the director and sole shareholder. This is common in limited companies.
Companies House requires all limited companies to have at least one shareholder. While this can be you, there is no limit to the number of shareholders you appoint, but the value of company shares must be disclosed upon registration. If you sell shares in your company, each sale will incur Stamp Duty which must be paid to Her Majesty’s Revenue and Customs (HMRC).
Before your limited company can be officially recognised, you must incorporate it by registering with Companies House. This can be done in one of three ways:
• Registering online - You can register your company via the Companies House website at a cost of £15.
• Registering by post – You will need to complete an IN01 application form, a Memorandum of Association (which must be signed by all shareholders) and an Articles of Association (your company’s rules should you not wish to use the standard Model Articles). This information must then be posted to Companies House. There is a fee of £40 for a standard 8-10 day service or £100 for same day service.
• Registering with an agent – If you require additional support, you can register through a Limited Company formation agent. Companies House have an extensive list of formation agents and fees vary.
Regardless of how you register, you will need to provide Companies House with the following details:
• Your company’s name
• Your company’s registered address
• Personal information of the director
• Full details of any initial shareholders
• The value of any shares
For compliance purposes, you must also state who the person (or people) with significant control is within your company. This is anyone who:
• Owns more than 25 per cent of a company’s shares
• Holds more than 25 per cent of the company’s voting rights
• Has the right to appoint directors
• Has the right to exercise significant influence or control
Should the person with significant control at your company change, Companies House must be informed.
Once registered, you must prepare full annual accounts which must be submitted to Companies House at the end of each financial year.
Now that your limited company is officially registered, it’s time to notify HMRC.
You must register with HMRC within three months of your company beginning any business activity (e.g. from the date of your first job). You will need to provide HMRC with the following information:
• Your company’s name
• Your company’s registered number
• Your company’s registered address
• The date on which your business was established
• What type of business you will be conducting
• The date up to which you will be preparing your first account
Failing to inform HMRC of your company could lead to a non-notification penalty.
Once received, HMRC will use your information to issue you with a Unique Taxpayer Reference which will contain details on how to set up an online account for paying corporation tax and completing tax returns.
Prior to starting your first job, you will need to open a business bank account. This is a legal requirement as the finances of your limited company must remain separate from your personal finances. Separating your finances will also make your life a lot easier when it comes to reconciling your accounts.
While combining your personal and business finances is taboo, opening a separate business account with the same bank chain is permitted. However, it is worth comparing the different services and benefits that banks have to offer. Keep an eye out for favourable interest rates, transaction fees and a personable service if you need help from customer support.
Find out more
You should now be ready to set up your own limited service company. However, if you are still in need of support, contact our Finance Compliance Team via email or by calling +44 (0) 1756 702 226 or 0845 340 876 and select option 1.
If you would like to learn more about the world of finance, why not read our agency nurse and locum doctor finance series?
Medacs Healthcare to Exhibit at Royal College of Psychiatrists International Congress 2019
Medacs Healthcare to Sponsor Eurospital 2019
Community Nursing: What is the Difference Between Community and District Nursing?
What are NHS Staffing Frameworks?