Do I need to be set up as an Employee in my new Company?

Jordan Macey

September 3, 2021

Do I need to be set up as an Employee in my new Company? guide
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Small Business Accounting

As a limited company director, you're classed as an office holder. You aren't automatically an employee at your companyeven if you're the sole director and only person working in the business.

It's isn't mandatory to be set up as an employee at your new company. However, there are benefits to doing so if you aren't employed elsewhere, as you'll be able to take advantage of your tax free allowances.

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What is PAYE?

PAYE, or Pay As You Earn refers to a method of paying income tax and national insurance contributions.

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Registering a Limited Company Guide Guide

Registering a Limited Company Guide

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  • 10 step process for setting up a Limited Company
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What type of business structure is best for you? Guide

What type of business structure is best for you?

If you're looking to the future with the hopes of beginning a journey running your own startup, chances are you're feeling some mixture of excitement, trepidation, and uncertainty when it comes to the finer details of your plan.

Starting your own business is an immensely fulfilling process and an excellent means to flex your creative muscles, but there's a lot of humdrum of business behind the process of turning a vision into a dream.

One of the most important (and one of the earliest) decisions in this process will centre around your business's formation. You'll have to select which type of business structure best suits your goals for the future.

While the choice may sound easy, you'll be well-served by giving the decision ample consideration. The business structure you select will have measurable implications on the way you make money and do business. It'll impact:

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If you make the wrong selection when it comes time to choose a business structure, you could be faced with a myriad of complications in the future.

Paying professionals for guidance and advice once things go wrong is costly and, for many, an embarrassing affair-performing research well in advance will ensure you're making the best choice for your company and that you can avoid losing out on money or pride later on.

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What are PAYE Forms? Guide

What are PAYE Forms?

There are different forms associated with PAYE. These are:

P45: A P45 form is issued to an employee when he or she stops working for you. It shows how much the employee has paid in tax and NICs throughout the tax year.

P60: A P60 form is an official form issued to employees at the end of the tax year. The form indicates how much the employee has earned over the tax year, as well as the amount they've paid in PAYE income tax and NICs. You need to issue the P60 to your employees by 31st May each year.

If you're a limited company director, you're considered both an employer and employee. As such, you'll have to issue yourself a P60 form.

P11D: The P11D is a tax form that records employment benefits that the employees and directors of a company have received across the year.

A copy of the P11D is to be issued to employees who've received certain benefits by 6 July each year. You should also submit the form online by the same date. If you're paying tax on all their benefits through your payroll, submitting a P11D isn't required.




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What is a sole trader? Guide

What is a sole trader?

If you're planning to start out on your own, one of the most important decisions you'll need to make is figuring out how you should structure your business.

As a freelancer, contractor or small business owner, there are three main types of legal structures you should consider:

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  • Working through an umbrella company

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When do I need a Limited Company? Guide

When do I need a Limited Company?

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.

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Sole Trader vs Limited Company Guide

Sole Trader vs Limited Company

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Key considerations when you register a Limited Company Guide

Key considerations when you register a Limited Company

As a freelancer, contractor, or small business, it is typical to start with the simple structure of operating as a Sole Trader.

While taxes and other administrative work may be relatively easy when you are a Sole Trader, as your volume of business goes up, there are more and more reasons to take on the task of becoming a Limited Company.

For instance:

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  • A Limited Company is usually more tax efficient than being a Sole Trader.
  • Once you have your name chosen as a Limited Company registered through Companies House, no one else can take your company name.

Luckily, running a Limited Company doesn't have to be exceedingly complex, though following a set plan will help to keep the complexity to a minimum.

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When do I make PAYE payments to HMRC? Guide

When do I make PAYE payments to HMRC?

If you're paying salaries to employees or directors, you need to register for PAYE and pay your PAYE bill to HMRC.

  • Monthly payments: Your PAYE bill is due on the 22nd of the next tax month.
  • Quarterly payments: Your PAYE bill is due on the 22nd after the end of the quarter.

There are various ways to make your payment.

  • Same or next day payments: online or telephone banking, CHAPS
  • Payments processed in 3 working days: debit or corporate credit card payments (online), Bacs, cash or cheque payments at your bank or building society, Direct Debit, by cheque through the post
  • Payments processed in 5 working days: Direct Debit (if it's the first time you're setting up a Direct Debit payment)

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When do I need a Limited company as a contractor? Guide

When do I need a Limited company as a contractor?

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.

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What is a PAYE Annual Return? Guide

What is a PAYE Annual Return?

The P35 is an annual tax return completed by employers. The form indicates the total tax and National Insurance contributions for each employee during the previous financial year.

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5 advantages of a limited company Guide

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The advantages of operating as a limited company are well known. It can be a great way to maximise your take-home pay, improve your credibility with customers and limit your personal liability. Like most things in life, it's a case of what's best for your situation. While the positives outweigh the negatives for most people, there are a few things you should know before you make the jump to a limited company.

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When you set up a limited company, you'll enjoy many advantages you don't get as a sole trader. Not only is it a tax-efficient way to run your business, it's also a great way to limit your personal liability and increase your credibility with customers. Additionally, it could open new avenues of work that wouldn't be open to you if you were operating as a sole trader, especially some contractor roles.

One of the disadvantages of running a limited company is that it involves a lot of paperwork, but with the help of this guide, we'll clear away the jargon and tell you exactly what you need.

If you're unsure about whether a limited company is right for you, check out our handy article comparing the differences between Limited companies and Sole Traders to see which business entity is right for you.

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What are the advantages of a Limited Company? Guide

What are the advantages of a Limited Company?

The advantages to setting up a limited company are:

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  • Using a limited company structure lends credibility to your business
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How do I set up a Limited Company? Guide

How do I set up a Limited Company?

To set up a limited company, you need to take the following steps:

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  • Choose how to set up your limited company
  • Complete the company formation process
  • Open a business bank account
  • Inform your stakeholders
  • Get your VAT registration or transfer sorted out
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Self Employed Registration Guide Guide

Self Employed Registration Guide

  • What is a Sole Trader?
  • Sole trader advantages
  • Sole trader disadvantages
  • How to register self employed
  • Sole trader responsibilities
  • Self employed tax
  • Important self employed deadlines
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How do I register a limited company? Guide

How do I register a limited company?

There are a couple of ways to go about registering a limited company:

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  • Go through a third party: An accountant or company formation service can help you process your application, significantly lessening your admin burden. Beyond the application, a good third-party service can also provide accounting advice, help you fulfil your filing obligations and assist with other admin tasks.

We've included further details in our guide on setting up a limited company.

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10 new business obligations when hiring your first employee Guide

10 new business obligations when hiring your first employee

Being a solo entrepreneur is an exhilarating experience, but eventually, a successful business will create enough work for more than two or three people to handle.

This leads naturally to the hiring of your very first employee, maybe even more than one. However, there is a big difference between being self-employed as a solo contractor and being an official employer.

You may be used to taking care of your own income, taxes, and workplace concerns but as an employer, you are suddenly responsible for the livelihood of one or more other people. People to whom you will be their boss with all the nitty-gritty details packaged with it.

Fortunately, you're an ambitious and successful entrepreneur ready to take on the challenges of graduating from a solo contractor to an excellent employer.

To help you, we have put together a comprehensive list of your new responsibilities that manifest the moment you choose to hire your first employee.

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What are the disadvantages of a Limited Company? Guide

What are the disadvantages of a Limited Company?

The drawbacks to setting up a limited company include:

  • There are additional filing and reporting requirements to adhere to.
  • Reduced privacy
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What is a PAYE scheme? Guide

What is a PAYE scheme?

PAYE-or Pay As You Earn-is a system of income tax withholding by employers.

Tax and National Insurance contributions from your wages or occupational pension and sent to HMRC, before your employer pays you your wage or pension. Student loan repayments may also be deducted in this manner.

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