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Many contractors or freelancers who initially were under the umbrella or in certain cases 'Sole Trader' may consider forming an Limited Company can offer the best long-term solution for a number of reasons.
There are three kinds of them in the UK that are: Private Limited Company (Ltd); Public Limited Company (PLC) or a Community Interest Company (CIC). CIC CIC is a form of organization which is utilized by community groups and PLCs permit you to sell shares to members of the public.

These are not structures that are relevant for contractors, so we will focus on the Ltd Company below. The first significant advantage offered lies in the fact that these are 'limited liability' structures. The shareholders of the company are not liable for its debts should the company fail.
For freelancers and contractors, the shareholder is typically the contractor's individual - however ownership may be divided among various people, including relatives. LTDs are legal entities in the law of their own and registering them is a little like registering a birth!
The company is responsible to its debts, and has an account in its bank and makes applications for loans and finance as a separate entity. Unlike sole traders, limited company profits are taxed by corporations whereas a sole trader will be liable to personal tax on profits.
Payroll and PAYE are required to be in place so that employees can be paid (the contractor). It is generally recommended to have an accountancy firm to handle this task for the business. A limited company should have at least one director of the company Anyone can fulfill this function as long as they're not a discharged bankrupt.
One shareholder is required . at a minimum, one shareholder holding a stake of PS1.00 is all that's required and the shareholder may be also the director. The requirement for a secretary for the company is not necessary for a limited company (only an PLC). This is the Certificate of incorporation It is the company's birth certificate, and establishes the business as an legal entity.

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