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Contractor Limited Company

A limited company is a business with a separate legal identity to it's owners and managers. This means that if the business was to be sued, the owners of the company i.e. you the contractor, are limited in your liability to the businesses debts.

In plain English this simply means that your personal belongings e.g. your home and possessions are safe if the business was to be sued.

Many companies in the UK will only employ contractors who work through their own limited company or through an umbrella company and will not employ contractors working through their own name (this is known as being a Sole Trader).

This means you can only really choose between joining an umbrella company which is very tax inefficient or running your own limited company which is very tax efficient.

Running a limited company is not as difficult as it sounds but you will need the assistance of a contractor specialist accountant such as 123 Contracting.

Take a look at the limited company advantages page in the left menu to see why this is a better route for most contractors than using an umbrella company. 

Please note: a limited company provides protection for your personal belongings if your company was to be sued, if however a lawsuit is the result of fraud or money laundering on your part then your personal belongings may still be at risk.


This information is for general information only. We take no responsibility for any action taken or refrained from in consequence of its contents. Always seek our professional advice specific to your circumstances before acting.