Contractor Umbrella/LTD and Insurance

[newbie5a]

Hello,

I am very new to contracting but have just been approached by a company to work on their behalf for one of their clients. In summary, I will work for a IT Training company and provide training for them for one of their clients.

Based on the above circumstances and likelihood of repeat work with this training company, I am debating if I should operate under a umbrella company or as my own LTD company. Do any of you have any thoughts or advice for me on this please?

Also: Based on my circumstances, if working for a company in the way that I am and working for one of their clients, if I did set up on my own would I need insurance or should this be covered by the training company? A little confusing I know but I guess this is common with people on this forum.

Hope this makes sense and I look forward to some discussion.

[Clare@InTouch]

You don't really provide enough information to make an immediate judgement I'm afraid. Whether or not a limited company is worth it depends on how long this work is going to last, how much you'll be earning, and whether you're happy with the small amount of extra admin involved in running your own company. You may also want to read into IR35, as that can be a deciding factor for many people.

If you had a Ltd company you'd have to get your own insurances, but most brollies would provide it for you as part of their service.

[LisaContractorUmbrella]

If you are new to contracting then an umbrella company is a good way to ease yourself in gently - you won't have to worry about the accounts side of running a business and IR35 won't be a concern. However, if you are a high earner and will have a good degree of autonomy in the role then you may want to open your own Ltd Co from the start - the only thing I would suggest is that you research IR35 and the responsibilities you will have as a company director first.
Good luck

[Wanderer]

would I need insurance or should this be covered by the training company?

The short answer is that if you go with an umbrella then this will generally include insurance.

If you have a LTD company, most people take out insurance because their clients demand that they have it and it's also a pointer to being outside IR35.

If the client doesn't require you to have insurance and you don't have employees or your own offices then generally speaking there is no law that requires that you have it. If your company did get sued then it could just cease trading and your only liability to the company is the share capital (typically £1 or £2).

A company costs maybe £100 in setup fees plus about £100/month for an accountant. There are lots of places that do insurance, so a search on the forum and you will find the usual suspects.

If you do go LTD then I strongly recommend that you engage one of the helpful accountants here who will guide you through the whole process and make sure you don't set the company up wrong or do something that will cost you thousands in avoidable tax in the long run.

Likewise, there are a few umbrellas that are mentioned on this forum.

Steer clear of tax avoidance schemes offering suspiciously high returns or based in another country (eg, Isle of Mann) unless you want a load of grief from HMRC and potentially a big tax bill in a few years time.

[northernladuk]

If you have to ask then go brolly until you can find your feet, know how it all works and learn a bit about what you need to do going forward. 6 months with a brolly won't break the bank but screwing up your LTD from day one will.