I'm leaving proper work and will hopefully be doing some on going paid work on a day basis, 1 or 2 days per week, sometimes more (Winter) sometimes less (Summer). Driving to odd parts of the country to do the work (expenses paid). I'm tempted by LTD, as the Umbrella fees will take a chunk unless I can put through the days in batches. I'm pretty well organised and good with figures. Is there anything else I should consider?
Ta....
Just the name of your Ltd company...
Rachel
Is there anything else I should consider?
"Normal" self-employed? Unless you have a good reason for separating out any liabilities into the Ltd Co.
Depends how much you're making.
I was doing similar, couple of days a week working as a contractor for a couple of years. Making about £25k gross.
Just registered as a sole trader and did my own tax returns. Wasn't really worth all the the rest of it
[quote=allthegear ]Just the name of your Ltd company...
Rachel
I went with Turner IT Services
i.e. TITS
Strapline: "Think Internet, Think TITS!"
I went with Turner IT Services
I considered Byte Me, but bottled it 🙂
LTD is a lot of hassle now for a small company. Not much incentive really (other than protecting personal stuff). We've been self-employed before and it's a lot simpler to administrate.
Ask an accountant?
My accountant says break even between ltd and sole trader is around £45k per year. He did the maths for my dad who is going semi-retired (2 or 3 days per week).
when peeps refer to sole trader, what actually is that???
This work you're doing, is it for just one client.... and will they specify when you do it/provide tools etc.
If yes, ltd is pretty much a waste of time.
It will be mainly for 1 client. Hopefully I'll be choosing when and how often. I'll be carrying out recruitment days (you wouldn't want to see me with tools)....Sole trader looks as if it could work, although that wasn't one of the options offered.
Sole trader looks as if it could work, although that wasn't one of the options offered.
That might be because of the transferable penalties - if you don't/won't pay your Tax/NI they are liable.
If they are offering you PAYE for occasional days, take that. Much less hassle all round.
There is obviously quite a difference in rates........
There is obviously quite a difference in rates........
You might have to do some sums.
Have a read of this lot...
http://www.contractoruk.com/first_timers/
I'm Ltd. And it's no hassle at all, I've a great account and she make sure I'm all good. Never had an issue with her.
Chasing payments tho?
Well, that's another story..
I'm still owed several thousand from last year.. 😳
Make sure you include all your expenses - accommodation, food, stationary. All of these can be deducted from profits ( and therefore tax).
Most of the above relevant unless you're caught by IR35. Honestly OP your question can't really be answered without a detailed understanding of IR35 (or your willingness to be open to future tax liabilities). Read up on IR35. If you've a prospective private sector client and can agree (and be prepared to demonstrate) an IR35 compliant contract and working practices then if above £40k or so (maybe less, depends on your accountancy fees) go Ltd.
That would be accommodation away from your normal place of residence, if you can get to a job from home without needing an overnight stay, then just claim the mileage instead. Mileage allowance is 45p/mile and easier to deal with that way than any other - tax deductible of course.
Similarly if a job is in another country then the whole travel & accommodation bill is tax deductible
Hi Pete, I've done umbrella and limited. Send me a message if you want to know anything not covered above.
IR35 is a mine field. If you can find two or more clients then the likelihood of being inside IR35, AFAIUI, is reduced . If the client is NHS then there's a chance they'll declare you inside IR35 even if you're not.
Get your accountant to check the contract you have with the client, a bunch of mountain bikers is as likely to agree on IR35 as they are to agree on "what tyres for..."
Thank you for the replies. So mainly 1 client (my to be ex employer). I may be travelling and staying away. I won't be doing too much. The plan is a max of 2 days per week in the summer and up to 4 days per week in the winter. One project pays a pretty decent day rate but no expenses, the others pay less but expenses. I think sole trader sounds the best option (if they'll let me use that option). I don't think I'll be earning enough to warrant the expense of an accountant.....
Pick up a few other clients during the year, even if it's just small jobs, to avoid IR35 and paying extra tax
Hi Rob, how the devil are you? I may well pick your brain.......
So mainly 1 client (my to be ex employer)
IR35 warning sirens are going off.
flashes - Member
when peeps refer to sole trader, what actually is that???
Sole trader is simply where you are set up business as self employed individual. You are personally for the business debts, so potentially "your home is at risk" as they say, but depends what risks you take on in the business.
A Limited Company is a separate entity and your are generally not personally liable. There are exceptions but usually down to have been doing illegal stuff as a company director.
As a sole trader you can't be hit yourself by IR35 in a way that would affect whether you can pay dividends and low salary or not, as you can't do that anyway, but you can still be deemed an employee and that can hit the end client with a ruling saying they have to pay you holidays, sick pay etc. That can put some clients off using sole traders.
In my business (IT) I've found a lot of clients will only deal with Ltd companies (and also insist they are VAT registered).
http://www.sjdaccountancy.com/information-centre/self-employed-limited-company
So I've been informed my choices are PAYE or Ltd co. The rates aren't drastically different, so veering towards PAYE.........
If they want you to go PAYE, does that mean you get holidays, sick pay, pension etc?
Is it the same company you worked for before? If so then you'd almost definitely be caught by IR35 so you rates to be ltd would need to be significantly more than PAYE so not to lose out.
PAYE in your specific case is basically a zero hours contract. There's no hassle on your part regarding setting up a company (sole trader or ltd). You will be an employee of your ex-employer. You will probably get some entitlement to pro-rata holiday pay. But don't quote me on that.
Ltd has risks and hassles. The risk is that you end up having to pay income tax on your earnings (at the same rate of tax that you would pay if you were on PAYE). If that happens then you eliminate any benefit of going ltd, and are still stuck with the accountancy and administration hassle of running a ltd company. In your case, the risk of that happening is high, since you will be [u]solely [/u]working for an ex-employer. If you are lucky, then you will avoid this risk (IR35) and may end up paying significantly less income tax than PAYE - depending on the income you earn. As I said before, if you earn less than £45k then these tax benefits won't apply.
To me it sounds like you'll be earning less than £45k, you're at higher risk of being caught by IR35, and you don't like the sounds of the hassle of managing a ltd company.
Rob, yep and as it's a recruitment agency, the PAYE package is OK and I'll be "employed"..........so I don't think IR 35 could be an issue