How to… Limited Company

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Hello all, hopefully you can help me out with this…

I have always worked offshore as an employee but I am now interested in going down the Limited Company route.

How do you do it?!

More specifically… what kind of documents are required to present to agencies or clients? Is there a specific kind of liability insurance required? If so, where can this be obtained?

These are the kind of ‘stupid’ questions that it is not really very cool to ask an agency about, for fear of looking clueless.

Here, due to the blessing of anonimity, I can be as stupid as I like- ha ha!

Thank you in advance!

[Paul Bond]

You can set up a company online or go and chat to an accountant.

You will need to set up a business bank account as well. (The agencies will need details of this bank account to pay your company invoices).

Most agencies will want a copy of your company PLC incorporation certificate.

Some agencies will let you use their insurance but others expect you to have your own – it can be obtained by most brokers. (Employers Liabilty Insurance). Don’t forget, it needs to cover were ever in the globe you are going to work.

Travel insurance is a good one to get under the company name as well.

Hope this helps. 😀

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Hello Norfolknchance2,

thanks for the reply. I should have been more specific in my original post… I alredy have a Ltd company up and running with bank accounts etc in place. (I’ve been using this for other interests up to now, not yet for offshore work)

So the employers liability insurance – how much does it need to cover?

Cheers 😀

[James McLauchlan]

In effect you are working as employee of a company.

In the UK – The company (in this case under your control) is required by law to have employers liability insurance to cover it’s employee (you).

(Note: It probably matters not a jot to the HSE authorities if an ROV agency or company say they don’t require you to have it. If you are inspected and you don’t have the insurance it will be you getting fined not them! I would equally suspect that if you are an employee of your limited company (which is a Ltd company supplying services to another Ltd company) you may not be covered by the Agency’s or ROV co employers liability insurance as they are not ’employing’ you but are contracting your company to supply services.
There is a difference.)

If it all goes wrong .. the employee (you, in this case) may need to claim off the company that you work for (your own Ltd company). That provision is facilitated by the insurance your company takes out. In effect you might have to sue your own company but the insurance should pay out the compensation not you personally.
Claiming from another company that placed you in danger at the work place may be seen as another case altogether and may take forever to prove/settle.

Here is some info in reasonably plain English from a UK site that may be of help.

If an employee should be injured at work or become ill as a result of work and decides to sue you for compensation, employer’s liability insurance ensures that there is at least a minimum level of insurance to cover the claim. Failure to take out an insurance policy which covers the claim can result in you being fined.

How Much Cover do I Need?
You must be insured for at least £5 million but once you’ve assessed your risks and liabilities you may decide that you need more than this. Most insurers offer cover of at least £10 million. You are able to split the cost of cover between different insurance companies as long as the total is at least £5 million. Remember that insurance cover includes costs so you may need to buy additional insurance to cover this.

What Conditions will Apply to Your Business?
As with any insurance, there will be a number of conditions attached to the policy which will be tailored to your business. Certain conditions, however, cannot be imposed. Your insurer cannot refuse to pay compensation:

* Purely because you have not provided adequate protection against injury or disease
* You cannot provide certain information to the insurer
* You have done something they told you not to do
* You haven’t done something they told you to do
* You have not met any legal requirements connected to the protection of your employees

However, if you haven’t complied with the health and safety measures the law requires – risk assessments, reporting accidents etc., then the insurer could end up suing you to recover the cost of compensation.

How do I Tell my Employees About the Insurance?
Your insurer will give you a certificate of employer’s liability insurance. This must clearly state the minimum level of cover provided and the companies it covers. You must display this certificate where employees can easily read it. (Stick it on the wall at home if that is your registered business address)

How Long do I Have to Retain Certificates of Insurance For?
For 40 years after their expiry date. This is because claims for diseases can be made many years after the disease is caused. You must make these available to health and safety inspectors upon request. This requirement only applies to policies in force on 31 December 1998 or later but you should retain any information relating to previous insurance policies just in case.

What Happens if I Don’t Have the Insurance?
You can be fined up to £2500 for any day you are without the insurance. Failure to display the certificate or be able to show it to health and safety inspectors can lead to a £1000 fine. (again…- Stick it on the wall at home if that is your registered business address, which is what I did when running a business from home in the UK)

[allstop]

Thanks James, very informative response.

I’ll get myself better informed about this as soon as possible.

So, to summarise I would need to provide the following documents to an agency or client:

1. Certificate of incorporation of the company
2. Employers liability insurance copy
3. Company bank account details

Plus the usual survival and medical docs required for an offshore bod.

Is that everything or is there something else that they could ask for? (It’s better to know before hand rather than scrambling round trying to get everything in order in the 48 hours before a mob!)

[James McLauchlan]

As well as your CV of course 😉

I would suggest that you only supply what they ask for and nothing more, but make sure, as a director of a Ltd company, you are complying with UK legislation and that you are financially protected should anything go wrong.

I would say…

1. CV – with full contact info.
2. Offshore Certs
3. Ltd Company name and registration number
4. Bank details for payment – bearing in mind that your invoice should clearly state all that information anyway, including your co VAT number, roistered trading address etc.

Talk it through by phone with them before hand to make sure you are on the same page regarding rates, payment terms and any other information they want top see on the invoice you present them with.
Also check if you are able to invoice at the end of each month or job, which ever comes sooner. That will help improve your cash flow if, for example, you are on a job that falls over the end of the month after a couple of weeks.

[senior]

Hi,

Just a couple more you may be asked for, I was when working through an agency for Sonsub (uk),public liability insurance, personal indemnity insurance were required by sonsub.

All in for the two above and the employers liability for me was £700.

hope this helps.

Senior $$.

all for one and one for all.

😀

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Thanks Senior, much obliged.

Hopefully this will be of use to other people considering going down the same route too.

I guess the Ltd co. route can work out much more tax efficient by playing around with salary vs dividends but obviously this is something to go through very carefully with a decent accountant.

Thanks again for your advice gents. 😀

[allstop]

Before I forget, if anyone does have a Limited Company (in fact, any kind of business) there is a FANTASTIC accounting solution that I use called Kashflow.

It is unbelievably simple to use and it makes keeping your books in order a piece of cake. I have also used Quickbooks and Sage but they are terrible in comparison. [Sage almost made me want to commit suicide, being a non accountant!]

They offer a free 2 month trial too, so you can try it for free then make a decision about if it is your ‘cup of tea’ or not.

The website is here:

http://www.kashflow.com

I’m not exaggerating to say that it transformed my business.

Happy accounting!

😀

[allstop]

I don’t usually reply twice to my own reply but anyway…

I have just found this on the business link website:

By law, an employer must have EL insurance and be insured for at least £5 million. Most insurers automatically provide cover of at least £10 million. Your EL insurance must cover all your employees in England, Scotland, Wales and Northern Ireland.

If your business is not a limited company, and you are the only employee or you only employ close family members, you do not need compulsory ELCI. Limited companies with only one employee, where that employee also owns 50 per cent or more of the issued share capital in the company, are also exempt from compulsory EL insurance. However, there is nothing to prevent an exempt employer from choosing to buy EL insurance, and many do, in view of the financial security it can provide.

The Health & Safety Executive (HSE) is responsible for enforcing the law on EL insurance. You can be fined up to £2,500 for each day that you do not have appropriate insurance.

link to page: http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858787&r.lc=en&r.l3=1074299774&r.l2=1074429816&r.i=1074301627&type=RESOURCES&itemId=1074301641&r.t=RESOURCES

So theoretically, I could legally not have employers liability insurance with my Ltd co. structure (One employee, 100% share ownership)

Having said that, going back to a situation where you want to go offshore in a rush, you wouldn’t want to have to mess around trying to arrange last-minute insurance, so it may be best to get it from the beginning.

Can anyone estimate the probability of being asked for this insurance by an agency or client? (I would love to save £700ish by not getting the insurance if possible)

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[James McLauchlan]

Can anyone estimate the probability of being asked for this insurance by an agency or client? (I would love to save £700ish by not getting the insurance if possible)

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Or… can anybody estimate the probability of needing to claim on this insurance should things go wrong?

My point being… would anybody want to save a few quid (in relative terms) in the hope that things may not go wrong?

[senior]

Hi, I needed all three types of insurance before I was allowed to sign my contract for Sonsub, Its quite easy getting public and employers insurances, but it took me about a week to get the third one personal indemnity.

"Its better to be looking at it than to be looking for it".

one for all and all for one,

Cheers,

Senior $$

[allstop]

Ok gents, thanks again for your input and advice.

I’ll go for the insurance route. (This is despite past experience in forking out thousands of £ in insurance policies over the years and not having to claim from them.)

It would be interesting to see if these insurance companies would actually pay out in the case there was a claim to be made – or perhaps they would seek to find some point 7.3.2 of the small print somewhere to decide that the cover was invalidated becaue the employee concerned was working too many hours or something of the like…

Anyway, thanks for your input and I hope this thread proves useful to others too.

Happy ROVing!

🙂

[Scott Beveridge]

Ok gents, thanks again for your input and advice.

I’ll go for the insurance route. (This is despite past experience in forking out thousands of £ in insurance policies over the years and not having to claim from them.)

It would be interesting to see if these insurance companies would actually pay out in the case there was a claim to be made – or perhaps they would seek to find some point 7.3.2 of the small print somewhere to decide that the cover was invalidated becaue the employee concerned was working too many hours or something of the like…

Anyway, thanks for your input and I hope this thread proves useful to others too.

Happy ROVing!

🙂

Allstop,

What? With the likes of those (almost) untouchable ins. cos. such as AIA, AIG? You’re actually worried about a payout? Once again, these are businesses with a one way door – it’s a no brainer.

[senior]

I would rather be insured and need to be insured to sign contracts, rather than chance "it", it’s a big what if, it’s not a no brainer.

I prefer quickbooks for accounts, saying that, I have yet to try kashflow.

One for All and all for one

senior $$

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