Basic advice when running your own Contractor business

[BrilloPad]

Any advice is only worth what you pay for it. How much did you pay before joining cuk?

[d000hg]

Any advice is only worth what you pay for it. How much did you pay before joining cuk?

That's your advice is it?

[cojak]

Self-Billing Invoices

Do not create your own invoices if your agency uses self-billing.

The Self Billing arrangements are that with HMRC's agreement, you do NOT raise an invoice as it is a duplicate of that raised by the agent. The SB arrangements are specific on this. You must not raise any other invoice as it effectively becomes a duplicate tax point.

You have your timesheets as your record. You submit them and the agent sends you an invoice \ remittance advice. This is all you need for your records.

In order to get the money into your accounts, enter it as Sales rather than invoice receipt and reconcile against the agent's SB invoice.

Recording income; must I create invoices? - FreeAgent

If you do not use FreeAgent or the like, keep a spreadsheet to track how much you think the invoices should be and when they should be paid, then reconcile that against the invoice/remittance advice when it arrives.

BUT

There are rules to be followed.

If you want to put in place a self-billing arrangement with your supplier you don't have to tell HM Revenue & Customs (HMRC) or get approval from them. But you do have to do the following:

• get your supplier to agree to the arrangement
• meet certain conditions

HM Revenue & Customs: Self-billing and VAT

So your Agency must make it very clear to you about the above rules, and they must do this with a written and signed self-billing agreement (see the HMRC website above). Make sure that they send this to you.

Thanks to BolshieBastard, Kugel and Wanderer.

[northernladuk]

LTD Co Loans

It isn't tax efficient to buy properties through your LTD or for it to lend you money. The same goes for cars. Remember first and foremost the company money belongs to the company and yours belongs to you. Trying to use the company money to prop up your finances is more than likely not going to work for a whole host of reasons.

Threads on the problems around loans...

LTD Loan site:forums.contractoruk.com/accounting-legal - Google Search

Thread on the problems about BTLs

LTD Loan site:forums.contractoruk.com/accounting-legal - Google Search

Threads on the problems around cars

LTD Loan site:forums.contractoruk.com/accounting-legal - Google Search

[BA to the Stars]

Keep Accurate Records

Keep a record of all expenses which your company pays to you as an individual. The reason for the expenses and the amount. Wherever possible, have an accompanying receipt for the expense.
Imagine that you need to explain the expense to the tax man in 6 years time - if you cannot explain it then your record keeping needs improving.

[SueEllen]

Can I put this training course through my business?

If you want to put an educational course through your business then if it's a full degree, full diploma or MBA, the answer is a clear "No".

It doesn't matter if it's related to the work you do simply because your limited company isn't big enough to gain the full benefit of you doing a full degree or full diploma unlike people who work for larger companies and organisations.

If the course is a short course or an individual module of a longer course, and it is related to work you are doing for a client then it depends.

If the course is directly related to your skills for example IT contractors can put IT courses through then it's likely to be accepted with no questions asked by your accountant and in turn HMRC.

If the course is not IT related then talk to your accountant. S/he will tell you whether it's acceptable or not.

If your accountant is a member of a professional body (which they should be) and says "No" so you can't put that book-keeping, flower arranging or whatever course through your business then don't come on here and argue that your accountant is wrong.

[iamintoit]

Valid Expenses - Outside IR35

The expenses allowable for a contract not caught by IR35 would be as follows:


01. Your gross salary – this would usually be kept low, in order to maximise dividends payable to yourself as shareholder (thereby avoiding employees and employers national insurance contributions).
02. Spouses salary (which must be actually paid and not unrealistic, having regard to the duties performed).
03. Travel expenses.
04. Motor expenses (mileage claims if the car is personally owned).
05. Accommodation and subsistence.
06. Telephone and business calls only.
07. Books, magazines, subscriptions and courses – where related to business and your contract work.
08. Bank charges and interest – on your company bank account.
09. Pension scheme – where paid by the company to a HMRC approved scheme.
10. Business insurances – professional indemnity, business contents and other business related insurances.
11. VAT on expenses if your company is VAT registered.
12. Computer costs.
13.Accountancy costs - if using a Limited Company.

[SueEllen]

Following the client's Health and Safety requirements isn't a pointer to being in or outside IR35.

Clients and the managers of buildings have a legal requirement to ensure everyone on site is safe whether they are a permanent worker, contractor, courier, HMRC inspector or any other visitor.

The HSE has downloadable PDFs (google it) explaining both your client's and your responsibilities under the legislation.

[northernladuk]

Following the client's Health and Safety requirements isn't a pointer to being in or outside IR35.

Clients and the managers of buildings have a legal requirement to ensure everyone on site is safe whether they are a permanent worker, contractor, courier, HMRC inspector or any other visitor.

The HSE has downloadable PDFs (google it) explaining both your client's and your responsibilities under the legislation.

The same can be sent for signing documents saying you have read associated documentation provided to you and agree you will adhere to clients IS, security and ethical workingrules and procedures. Even if they require you take a short online course and log the results with HR. They are there to protect both the client and yourself, not to make you look like a permie.

[cojak]

Expenses: the 24-month rule

The expenses allowable for a contract not caught by IR35 would be as follows:
...
03. Travel expenses.
04. Motor expenses (mileage claims if the car is personally owned).
05. Accommodation and subsistence.
...

But remember that these expenses are only claimable with the 24-month rule.

The 24-month rule has nothing to do with your company. And it has nothing to do with contracting or permanent employment.

It has EVERYTHING to do with location.

If you have been there 24 months and spent over 40% of your time there (and 1 day a week WFH still makes it over 40%), then you will not be able to claim once you know that your contract will take you over 24 months.

And the location can mean anywhere in the City of London (or close to it) or similar.

I would say that 50 miles and you can argue it but I've heard people being challenged for working along the M4 corridor between Bristol, Swindon and London.

The only way you can go back is to go to another contract for 6 - 12 months* and then return - that 'resets the clock'.

I would only feel safe if I moved from London to Manchester, Leeds, Birmingham, or Bristol.

*I recommend 9 - 12 months, others recommend 6 months.