Sole trader vs Limited Company - low paying 3 month gig

[Untouchable1]

It's been a long time since I was contracting, so I'm not up to speed on the latest stuff.

I just came out of a perm role. Expect I'll be looking for my next one for 3-6 months.

In the meantime, I've been offered a 3-month contracting gig for £382 a day.

They asked me if I want to invoice through a Ltd company or as a sole trader. No mention of IR35.

What do I need to do? Is it worth bothering with a Ltd?

[hobnob]

I wouldn't class £382/day as low, especially if you're working through a limited company. However, that's subjective.

I'm surprised that they've given you the option of being a sole trader. Just be aware that a limited company means limited liability, i.e. you won't personally go bankrupt if you make an expensive mistake (e.g. deleting a production database). Are you happy taking that risk as a sole trader?

The third option would be to go through an umbrella company. You'd still be invoicing through a limited company, it just wouldn't be a company that you own. If the client will accept that, it's probably the simplest/safest option.

[Untouchable1]

This gig is very low-risk, so I'm happy from that perspective.

Just interested in the financial aspect.

[hobnob]

In terms of finances, it will depend what happens after 3 months. E.g. are you going back to perm? Going through an umbrella? Continuing to work through your own company?

It also depends what costs are associated with the company. In particular, you'll basically need to pay accountancy fees for a year, even if you only use the company for 3 months. (Unless you feel confident handling all of that yourself.) Likewise, you'll presumably need to take out insurance (e.g. PII) for a full year - has the client given you guidelines on how much cover they want in each category?

My gut feeling says that it's not worth it for 3 months, but you can play around with some figures in a spreadsheet if you want a more definitive answer.

[Maslins]

As hobnob suggests, if you think there's a good chance it might be this 3 month stint then that's it (EG you take a permie role after that), a Ltd Co is overkill. The faff in getting it incorporated, registered for various taxes, biz bank account, bookkeeping etc, only to then be done with it in a few months wouldn't be great. A lot of faff to DIY, and an accountant would still charge £1k+ even if it's only for what you see as 3 months work.

Worth having a proper think about what you expect to happen after the 3 months. If you're confident you're done with permie life and it'll just be contracts from here, a Ltd Co could be the way to go. But I get the impression that's not the case. So I'd probs suggest umbrella or sole trader (if indeed they'll accept the latter).