If you're a freelance or contract chef working in restaurants, at events, or in private homes, you may have considered which business structure best suits you.
One option is setting up as a limited company. It can boost your professional credibility and, if you navigate IR35 rules correctly, help you manage your earnings more efficiently.
Check out our Bookachef guide to learn more:
What Is a limited company?
A limited company is a legal business structure that separates you, the individual, from the business itself. Instead of being paid as a sole trader or via PAYE (Pay As You Earn), you would produce an invoice for work completed, which would be paid to your business. You then pay yourself through a combination of salary and dividends.
The financial benefits
1. Flexible income planning
Unlike PAYE or sole trader setups, a limited company gives you greater flexibility in how and when you receive income. Many directors choose to take a modest salary and draw the rest as dividends, subject to current rules. This can allow for more strategic financial planning depending on your needs and workload.
Tax rates are subject to change, so it’s important to seek up-to-date, professional tax advice to ensure compliance and maximise your benefits.
2. Claim legitimate business expenses
As a limited company, you can claim legitimate business expenses including tools, uniforms, travel costs, and even a portion of your home expenses if you use it for admin. These help reflect the true cost of delivering your service.
3. Better control over income
You can choose when to draw dividends, giving you greater flexibility in managing cash flow and long-term planning. This is useful if work is seasonal or varies from month to month.
What about IR35?
IR35 is a tax legislation designed to catch people who are working like employees through a limited company to avoid paying higher taxes. If you're "inside IR35", HMRC considers you an employee in practice, and you’ll have to pay similar taxes to someone on PAYE.
However, many chefs work across multiple clients, control their own schedule, provide their own equipment, and aren’t tied to one workplace. These are all signs you could be "outside IR35", meaning you’re self-employed and can benefit from the limited company model.
Even if some contracts fall inside IR35, others might not, and you only pay the higher tax on those specific jobs.
It is essential to seek appropriate professional advice.
Perks of becoming a limited company
- Clients may take you more seriously when you operate as a company
- You can build a brand around your business name
- It’s easier to expand, hire staff, or apply for business loans in future
What Is an Outside IR35 Placement?
A placement outside IR35 is a contract where you're considered genuinely self-employed. This means you:
- Work for multiple clients
- Set your own schedule
- Provide your own tools or equipment
- Are not under direct supervision
- Can send a substitute if you're unavailable
If your working relationship meets these criteria, you may be classed as outside IR35 and can take full advantage of the financial benefits of running a limited company.
Final thoughts
Becoming a limited company isn’t the right move for every chef, but for many, it’s a professional and efficient way to structure their work. It can support long-term career growth, provide better financial planning, and a more business-oriented approach. It’s important to speak with an accountant experienced in IR35 to assess your individual situation and ensure you’re set up correctly. Always seek appropriate professional advice. Alternatively, give Bookachef a call, we can connect you with trusted experts who can guide you.