When do I need a Limited company as a contractor?

Setting up a limited company for contracting becomes necessary when your annual turnover exceeds £85,000, you want to maximise tax efficiency through dividend payments, need to demonstrate IR35 compliance, or wish to establish credibility with clients who prefer corporate suppliers over sole traders.

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Written by MAAT

When do I need a Limited company as a contractor?
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There is no clear cut time as to when you should start working through your own limited company. With other routes available—such as operating as a sole trader, or working through an umbrella company—it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.



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