How to become a Contractor FAQs

Complete details of the process, as well as copies of forms required, can be found at www.companieshouse.co.uk. The first decision you will have to make is to choose a Company name. Go to the Companies House website and ensure that a Company with your chosen name does not already exist. You alone can be a shareholder of your Company but you may wish to take the tax advantages of making a spouse a shareholder and use up their tax allowance or the benefits of lower income, lower rate tax band.

According to the Companies Act 1985 section 10, to set up a company, you will require a Memorandum of Association. This can be drawn up by a solicitor. Its purpose is to inform the public who is responsible for the Company and what type of contracts you intend to make. The Memorandum should be signed by shareholders and a witness.

These are the rules of the Company, and though they will not create rules against Company Directors, they will create rights against the Company for Shareholders. You may use the default Articles of Association as listed in the Schedule to the Companies (Table A), or draft your own. You can use another's Articles as a model and ask a solicitor to advise on suitability. This may be prudent if you have single Directors or single Shareholders. As with a Memorandum of Association, Articles of Association paragraphs and pages ought to be numbered. Articles should be signed by all shareholders and a witness.

The Companies Act 1985 section 10 requires that Form 10 be completed for Limited Companies. This form needs to be signed by the Company Secretary, all Directors and Shareholders. Section 12 of the Act requires that Form 12 be completed. The details entered should be those of either the Company Secretary or a Director. The forms should be printed prior to submission to avoid any discrepancies between data entered and data viewable. Form 12 needs to be signed by the person named on it, in the presence of any of the following people, solicitor, commissioner for oaths, notary public or JP who will usually make a charge of £5 to act as a witness. This form can't be witnessed until Form 10 has been completed. You should strike out "Solicitor engaged in the formation of the Company" if you are naming a Company Secretary or Director as the declarant.

For a same-day turnaround regarding Company registration, the fee is £50. In this case your paperwork should be at New Companies Section, Companies House, Crown Way, Cardiff, CF14 3UZ by 3pm. Ensure that you mark your envelope "Same Day Incorporation". However if you have the luxury of more time, the fee for a turnaround of 8 to 10 working days is £20. Whichever timescale you are working within, you should photocopy all documents and forms sent to Companies House.

The registerable limit for VAT is an annual turnover of £64,000 (2007/08 limit). If you believe that your Limited Company will generate more than this limit you ought to register for VAT. This will allow you to claim the VAT back on purchases made by your Limited Company. If you have not registered for VAT and you exceed the stated limit you will be issued with a VAT bill that should be paid out of your VAT- excluded earnings. At Hazell Carr we ensure that the VAT status of the contract is confirmed prior to the signing of any contracts.

Professional Indemnity Insurance, or PI Cover as it is usually known, is to protect you in case you make a mistake whilst working for a client. PI Cover to the value of £1 million is required if you are working on a Hazell Carr contract for endowment review, pension review or past business review contracts, at a cost of approx £200 pa. PI Cover is not necessarily required to cover Financial Advising roles. You should note that according to the Limitation Act you would be required to continue paying premiums for 6 years after the completion of a contract.