Wife going contracting as well

[eldy]

Hi,

Im an IT contractor and my wife is now going contracting in Accountancy.

She's won a 4 month contract and we are going through process of getting the ltd company created et al.

She wants to do her own accounting and she is happy to learn as she goes by looking at how my accountant manages my business and replicating that.

Just a few questions

1) How do I deal with her start up expenses? I already have my own office in our attic room with PC, printer, monitor etc that I have already claimed as expense under my own ltd company. She will be making use of these for business administration as there is no point in buying extra kit, her main work will be done at client site. Is there any issue in her ltd company claiming these as an expense as well?

2) Should she get IR35 insurance at this stage or at all? I get impression IR35 is just an IT contracting issue, is it worthwhile for accounting contractors?

[NotAllThere]

...my wife is now going contracting in Accountancy....
She wants to do her own accounting and she is happy to learn as she goes by looking at how my accountant manages my business and replicating that.

So, she's going contract in accountancy, but doesn't know how to do accounts?

1) Her start up expenses. Any that are incurred can be claimed back. You can't make expenses up, you can't double claim. Your company could charge a fee for system provision.

2) IR35 is not just an IT contracting issue. It's a taxation issue. Therefore it can equally apply to accountancy contractors, librarian contractors, or orangutan hair care contractors. Even more so for accountants, librarians or orangutan hair care contractors working for a public body.

[northernladuk]

Hi,

Im an IT contractor and my wife is now going contracting in Accountancy.

She's won a 4 month contract and we are going through process of getting the ltd company created et al.

She wants to do her own accounting and she is happy to learn as she goes by looking at how my accountant manages my business and replicating that.

Is she a qualified experienced accountant or is she learning like the other guy we had on not so long ago?

Just a few questions

1) How do I deal with her start up expenses? I already have my own office in our attic room with PC, printer, monitor etc that I have already claimed as expense under my own ltd company. She will be making use of these for business administration as there is no point in buying extra kit, her main work will be done at client site. Is there any issue in her ltd company claiming these as an expense as well?

If she's happy to see how your accountant handles things why aren't you asking them on principle. She's not going to learn anything from you doing DIY online accounting no? She'll be able to claim 4 quid a week for rent of the office. What other expenses are you expecting to incur? You mean the PC/monitor?

2) Should she get IR35 insurance at this stage or at all? I get impression IR35 is just an IT contracting issue, is it worthwhile for accounting contractors?

As an IT contractor you seriously need to understand IR35 better.

She isn't going to learn much when she's got you asking questions on her behalf.

[b r]

Sorry, but why go through the cost of creating another company with fees when she could just join you?

FWIW I started contracting in 2003 and then my wife got a contract in mid-2005.

We both take the same out of the business, irrelevant of what we earn, except expenses (we claim what we've paid out).

It's worked well for us with each others contracts 'smoothing' out the income flow and no additional cost from Accountancy/Banks etc.

Any reason not to?

[stek]

Sorry, but why go through the cost of creating another company with fees when she could just join you?

FWIW I started contracting in 2003 and then my wife got a contract in mid-2005.

We both take the same out of the business, irrelevant of what we earn, except expenses (we claim what we've paid out).

It's worked well for us with each others contracts 'smoothing' out the income flow and no additional cost from Accountancy/Banks etc.

Any reason not to?

Yes, divorce...

[northernladuk]

Yes, divorce...

Different SIC code as well.

[Alan @ BroomeAffinity]

I have clients who have husband and wife contracting in the same company and it works OK. I'm not sure it would in your case if the contract is only four months long, as you'd need to muck about with the shareholding more than I'd be comfortable with. TBH, I'm not sure I'd even bother with a limited company at all for that length of time. Consider umbrella.

If your wife does decide to form a company, remember that whatever accounting she's done in the past, these will probably not be transferrable skills for the requirements of a contracting company. As has been alluded to, contractor "accounting" is really specific tax expertise rather than double entry book-keeping. And, given that you were of the opinion that IR35 applied only to the IT industry, this would confirm you are in need of such expertise.

[northernladuk]

Just a thought. I'd look very carefully at the IR35 situation. The thread we had with an accountant wife turned out to be more complex than the initial question. When we dug in to it she was inside IR35 by the nature of her engagement. I don't know how accountants get contract work but if she's back filling for maternatiy or while they recruit it could be more like temping than contracting. She won't have RoS and they will expect her to be under D&C rather than deliver a specific piece of work. I am guessing there could easily be a case where she's just a bum on seat working with other employees for some reason which won't help.

I'm not sure IR35 is as straightforward as it is for us..

[NotAllThere]

I have clients who have husband and wife contracting in the same company and it works OK. I'm not sure it would in your case if the contract is only four months long, as you'd need to muck about with the shareholding more than I'd be comfortable with. TBH, I'm not sure I'd even bother with a limited company at all for that length of time. Consider umbrella...

Would a brolly offer any advantages over simply taking the wife on as an employee of the husband's company?

[WordIsBond]

Alan, you suggested umbrella. That puts her fully into PAYE and the umbrella takes their cut.

If we're going full PAYE anyway, why not just bill through his own LtdCo, pay her under PAYE, not change the share structure at all, and save the umbrella's share? Then, if she makes a go of it, likes contracting, and gets another contract, they could change the share structure then.

For all we know, his wife may already own shares anyway. But is there any reason what I proposed wouldn't work?

Even better, I think, he could sign the contract but then pay her as a self-employed subcontractor, which would let him out of PAYE and all that comes with it. After four months, add her to his Ltd or get her own, whatever makes the most sense for them.

An umbrella seems an unnecessary expense in this case, when he's got a company set up already.

Edit: Heh. NAT beat me to it.