Invoicing Through Your Own Company
Trading through a company changes how money reaches you and what you must file; it generally does not settle what the working relationship is.
Who am I actually engaged by here?
What you signedWho is responsible if something goes wrong?
The law where you areWhat is the intermediary taking, and for what?
What you signedDoes the structure change what I am?
The law where you areFour questions a person in this position actually asks. Every one of them has somewhere to look, which is not the same as having an answer. The structure was chosen by somebody else, for reasons that were not about you.
Trading through a company of your own changes how money reaches you, what has to be filed and by whom, and in some places how much is owed. It generally does not settle what the working relationship is.
The distinction described in “Invoicing Through Your Own Company” should be settled before operational software is configured. When considering review this official implementation note for remote employee productivity monitoring, document whether the person is an employee, contractor or agency-supplied worker, then apply only the records, access and approval workflow appropriate to that arrangement.
That last point is the one most frequently oversold, and the cost of believing it falls on you rather than on whoever said it.
Readers comparing the situation in “Invoicing Through Your Own Company” can also consult Wellfound startup-work articles. Use it as a separate perspective, then check the contract and rules that apply where the work is performed.
What it does change
Administration and liability, mostly. There is a separate legal person with its own obligations, its own filings, its own bank account and its own money, which is not yours until it is moved properly.
In several jurisdictions it also changes what is owed and when, which is the reason most people are advised into one.
What it does not change by itself
What you are, for the purposes of whichever bodies decide that. Several systems look at the relationship between the person doing the work and the organisation receiving it, and a company in the middle does not end that enquiry.
Rules addressing exactly this exist in a number of places and have changed repeatedly. Whether any reach you is a current question for somebody qualified.
Why clients ask for it
Frequently it is their requirement rather than your choice: a policy of not contracting with individuals, or a procurement system that only handles company suppliers.
Where that is the reason, it tells you the structure is about their obligations, which is useful context for every other question in this section.
The money is not yours yet
The practical discipline people get wrong first. Money in the company account belongs to the company, and taking it out has rules, timing and consequences.
Spending from it as though it were a personal account is the single commonest early mistake and it is expensive to unwind.
What you now have to do
A list that differs by jurisdiction and always exists: filings on a schedule, accounts in a form, records kept for a period, and deadlines with penalties attached.
None of it is difficult and all of it is unforgiving about dates. This is the part people underestimate when told a company is straightforward.
Getting help with it
An accountant where you work, and the cost belongs in the arithmetic as a line rather than as an afterthought.
The value is partly the filings and mostly the questions you will not know to ask. A yearly conversation is the minimum; a quick one when something changes is worth more.
Whether it is worth it for you
A real calculation with a real answer, and it depends on your figures, your jurisdiction and how long you expect to work this way.
For some people it is clearly worthwhile and for others it costs more than it saves. Anybody giving you a general answer without seeing your numbers is not answering your question.
Insurance and the company
Policies should be in the right name, and the right name is usually the company rather than you personally.
Worth checking at renewal, because people frequently set up cover personally and then form a company without changing anything, leaving a gap nobody notices until a claim.
What happens if it ends
Companies have to be closed properly, and leaving one dormant or abandoned has consequences that arrive by post years later.
Where you stop working this way, closing it down deliberately — with advice — is part of the ending. The article on the last invoice has a companion here.
The paperwork clients ask for
Registration details, insurance certificates, and sometimes evidence about how you operate. Keeping a current set in one place makes the start of every engagement faster.
It is also, incidentally, the kind of material that describes a real business, which matters for reasons the last section of this collection covers.
Being a company and being dependent
The combination worth noticing: a company with one client, no other income, and work directed day to day.
The structure says one thing and the week says another. Which of those carries more weight where you are is precisely the question the final section is about, and the company does not answer it.
The separations to keep
Four, and all of them are habits rather than rules:
- A bank account for the company, used for nothing else.
- Money moved out deliberately rather than as needed.
- Records kept as you go rather than reconstructed yearly.
- Insurance, contracts and registrations in the right name.
None is difficult. All four are what distinguishes a company that is actually run from one that exists on paper, and the difference shows up when anybody looks.
Where general reading stops helping
Whether a company suits you, and what it changes about your position. Both depend on your jurisdiction, your figures and the shape of your work, and the rules in this area move more than almost anything else in this collection.
The one thing that is safe to say generally is that a company is an administrative structure rather than an answer, and that treating it as an answer is how people end up with a problem they were told they had solved.