Software Development contract for US co - questions

[jamesbrown]

Ltd would also allow me to Vat reg, which may be beneficial as I'm probably guna have to spend some money on new IT hardware to support testing etc.

Yes, it will save something. For the arrangement you describe with a US client, it probably wouldn't make sense to register for the VAT Flat Rate Scheme, but it might be worthwhile in future (if you have UK clients, because the FRS income generated by sales would probably be much larger than the FRS cost on purchases, although it's also worth noting that you can still reclaim VAT on large capital purchases under the FRS). For sales, the place of supply will be the US, so outside of the scope of VAT.

[stek]

What about setting up as a sole trader (if client are ok with it), not as tax efficient as a Ltd but better than a brolly.

Sole trader is far more tax-efficient than Ltd, it's the Holy Grail!

[d000hg]

Start a Ltd. company. Then you can collect the money in that and pay yourself dividends as and when it suits you.

VectraMan,

I did toy with the idea of setting up a Ltd. company, but wasn't sure if it was worth it for a single piece of work. However I guess with the amount of money on the table, it may well be worth the overhead...

Is there anything special to consider when trading as a Ltd. co and working with a US co?

Cheers
Gav

What about setting up as a sole trader (if client are ok with it), not as tax efficient as a Ltd but better than a brolly.

A Ltd doesn't have to cost more than a token amount to set up and run - you can create it for £50 or less and I think renew your company status for about £20 a year if you do your own accounts. However you'd be best using an accountant since this will impact your personal tax, probably NOT a contractor accountant but a generic one.

A direct contract with the US company would be my preference, is there a reason they don't want to do that?

[fatmcgav]

Yes, it will save something. For the arrangement you describe with a US client, it probably wouldn't make sense to register for the VAT Flat Rate Scheme, but it might be worthwhile in future (if you have UK clients, because the FRS income generated by sales would probably be much larger than the FRS cost on purchases, although it's also worth noting that you can still reclaim VAT on large capital purchases under the FRS). For sales, the place of supply will be the US, so outside of the scope of VAT.

James, cheers for that. Will look into FRS...

Sole trader is far more tax-efficient than Ltd, it's the Holy Grail!

Stek, cheers for the vote. Will see if the US Co can trade with a sole trader.

Gav

[d000hg]

I would not use terms like "Sole Trader" with the US company because they won't necessarily know what that is, and it doesn't matter to them if you are a ST or not. All you want is a contract between them and you personally, i.e. a contract between John Smith and MegaCorp.

[TheCyclingProgrammer]

On balance, if you'd rather get the money sooner rather than later, I'd also recommend investigating he sole trader route too. Remember you will still have NI to pay.

[fatmcgav]

Cheers both. Will do some more research into becoming a sole trader.

I've had some feedback from the US Co, and on principle they'd have no issues contracting me directly; However they are nervous that it's getting close to go time and they don't want to delay things where possible.
There's also the requirement for some docs to be produced, such as a Scheme of Work and a Master Software Agreement, which if I'm honest I've never done before.
Does anyone know of any off the shelf documents available, either free or paid.

Cheers
Gav

[d000hg]

https://www.pcg.org.uk/ offers such templates to paid members, and they're pretty good. You can buy them other places too if you google around.

[fatmcgav]

https://www.pcg.org.uk/ offers such templates to paid members, and they're pretty good. You can buy them other places too if you google around.

Cheers for the link. Will take a look.

[fatmcgav]

A Ltd doesn't have to cost more than a token amount to set up and run - you can create it for £50 or less and I think renew your company status for about £20 a year if you do your own accounts. However you'd be best using an accountant since this will impact your personal tax, probably NOT a contractor accountant but a generic one.

A direct contract with the US company would be my preference, is there a reason they don't want to do that?

d000hg,
Apologies, missed this post on my phone.

Useful to know with regards to running a Ltd Co.

I think the initial reason for US co seeking out a UK based partner was that neither of us have much experience in Software contracting in the UK, and all the requirements around that.

Cheers
Gav