I am thinking of transforming my freelance platform into a company…
Does anyone have experience of this process, or any advice? My freelance work has expanded from writing services to marketing and content strategy, and although I still have some clients purely writing-based, I feel it may be valuable to launch my services as a business so I can potentially hire additional assistance.
Any thoughts?
Replies9
- There are pros and cons to moving from freelance to company.With a company you get the professional status, however, clients may expect higher prices to come with your services.If you're looking to expand and hire, it is the natural step to progression.
- @Hannah Marie ZTHope it all goes well
- @Gavin Kemp this is incredibly useful, thank you!
- Not a bad idea.
- Hannah,On the basis that your freelance platform is currently operating on a Sole Trader basis, your question is about changing it into a Limited Company.Fundamentally changing your business to a limited company is about establishing your business as a separate legal entity from you as an individual. As a sole trader you and your business are the same legal entity, with a limited company your company has one legal entity – and you personally have a separate legal entity. This has all sorts of benefits, but fundamentally it is about reducing personal risk and liability. For example as a limited company (except in certain circumstances) you are not personally responsible for the liabilities of the company, ie it protects your personal assets from your creditors. As a sole trader you are personally responsible for all your trading liabilities so your creditors can come for your house if it all goes seriously wrong.You will need to produce a separate set of accounts for the limited company every year that will cost you in accountant fees (arround £500 -£1000 ish).Becoming a Limited Company had nothing to do with doing a SWAT Analysis, marketing planning etc, creating a business plan or the money you take out of the company – you should be all over these anyway whatever your trading form. There are Tax Planning advantages on how you take money out of a Limited Company, but these are lesser benefits that the government is trying to reduce.The thing that matters is separating you personally (in legal terms) from your trading entity and keeping any trading liabilities within a single clearly defined entity/space – the Limited Company.The best route forward is to speak to your advisors if you don’t know what you are doing (Accountant is a must and, your lawyer would be a helpful but not essential depending on how good your accountant is). If you understand what you are doing it’s easy to just get the business incorporated as a Limited Company.Personally I set up as a Limited Company as soon as I started trading.Good luckGavin
- Congratulations .. first reserach the market and after all of the analysis launch the services.
- Great idea. But you should research market first. Understand your USP, do SWOT analysis, PASTLE analysis, use Lean Canvas for this.Feel free to reach me if you need help.
- Great question @Hannah Marie ZT, I've just sent you a DM!
- Hi Hannah, congratulations on expanding your business! In my opinion I would say that it comes down to your salary. If you are making upwards of £50k it makes sense for tax purposes to transfer from a sole trader into a limited comany. You can still employ people as a sole trader. Hope that helps!
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