Moving from inside to outside IR35

[cojak]

You can reply to the thread here.

Hi all. Looking for some quick advice. I'm currently contracting in Product Management and moving to a new contract and different company which is outside IR35. I'm used to the easy life within IR35 but excited about the tax savings. However, I'm starting this new contract in 1.5 weeks and just wanted to check if it's possible/realistic to get everything sorted for then (i.e. set-up a limited company, business bank account, accountant, etc.) What would everyone recommend in terms of approach? I believe the limited company is the more widely used approach, however I've heard you can also use umbrella companies when outside IR35 too. Ideally looking for the lowest costs and good customer service if considering an umbrella - I've previously used Paystream who were great.

Any help would be greatly appreciated.

[Netraider]

I have just returned to contracting after three years as a permie... Never again. It took my accountant less than a day to get my company up and running. I opened a new business account (Starling Bank) in less than thirty minutes. It took VAT details about five working days. I did think about using an umbrella as I have in the past, however, I have picked up quite a few small pieces of work for various clients so am using a Limited to work through.

Not everybody will have such an easy time setting up though.

HTH

[chris424uk]

Is there anywhere I can find a 'To Do' list for setting up a Limited Co for contracting? I think I've got the fundamentals; business bank account, register a new company and get it up-and-running, etc. Just want to make sure I don't miss anything and need to move fast.

[chris424uk]

I have just returned to contracting after three years as a permie... Never again. It took my accountant less than a day to get my company up and running. I opened a new business account (Starling Bank) in less than thirty minutes. It took VAT details about five working days. I did think about using an umbrella as I have in the past, however, I have picked up quite a few small pieces of work for various clients so am using a Limited to work through.

Not everybody will have such an easy time setting up though.

HTH

What's the main benefits of umbrella vs Ltd co? I'm assuming umbrella costs more in fees but takes away a lot of admin?

[hobnob]

You said that you're already working as a contractor (inside IR35), but I assume you're not using an umbrella for that. Were you employed by the agency?

Also, how long is your new contract for? If it's only a month, you might be better off starting with the umbrella, just in case you go back inside afterwards.

[ladymuck]

Online banks like Starling are quick to open accounts but many banks are reporting 4 week lead times for opening so you need to check. However, you don't need a bank account on day 1, you just need to have it set up in time for your first invoice payment.

As you don't have much time, you could check with the agency if they'll accept you starting off with an umbrella and then switching to a LtdCo when it's set up. Some will do this mid contract, others won't and you'll have to wait until renewal time.

As for a check list:

• Get an accountant
• Create Limited Company
• Open a bank account
• Register for VAT
• Register for PAYE
• Purchase PI insurance and any other insurances as required by your contract

[ladymuck]

Also, how long is your new contract for? If it's only a month, you might be better off starting with the umbrella, just in case you go back inside afterwards.

This. If it's three months with chance of extension, I'd still go umbrella and then spend those three months making sure a LtdCo is the way forward.

Are you aware of your duties as a director, that the money in the company is not your money, how to do basic book-keeping and record transactions, especially VAT, properly? Do you know how to tell whether your dividends are legal or not? Do you know how to operate payroll?

Yes, most of this can be palmed off onto your accountant but having a clue is also vital.

[cojak]

It’s been ages since I recommended this page, but here you go, take a look through the articles linked here…
https://www.contractoruk.com/first_timers

[chris424uk]

This. If it's three months with chance of extension, I'd still go umbrella and then spend those three months making sure a LtdCo is the way forward.

Are you aware of your duties as a director, that the money in the company is not your money, how to do basic book-keeping and record transactions, especially VAT, properly? Do you know how to tell whether your dividends are legal or not? Do you know how to operate payroll?

Yes, most of this can be palmed off onto your accountant but having a clue is also vital.

It's atleast a 6 month contract, so won't be short-term. I was previously working as a contractor (inside IR35) and since it was public sector, through an umbrella (Paystream), so never had to deal with a lot of this stuff. I'm willing to learn and reading as much as I can online - first steps I'm thinking of using Gorilla Accounting (good reputation around here) to deal with most of the admin tasks you mentioned above, including company formation.

[northernladuk]

Get yourself an accoutant first. They will guide you through it.

List of recommendations in a sticky at the top of this part of the forum.

Also you need to learn about IR35 quickly. There is a lot to digest. Yes it's the client responsibility but you've still got to know what it is to be able to stay outside. Links on the right. It's gonna take some getting your head around if you've never been outside before.