Setting up company and composites having read the postss

[dmini]

My accountant is much less
Plus
vat registration - flat rate and the money you can make on that

Make sure you are comparing like for like. Is that Giant option the one that automatically pays divis. In which case - do they review the contract & check its outside IR35? - or are you expected to assume it is (and wait for HMRC to call), or pay for reviews, insurance etc yourself.
If it is the basic PAYE only option, then it is not the same as yourco, where having done all the IR35 hoops, you WOULD be paying divis

[hattra]

I'm with Giant, using their composite option - they review all contracts against IR35, and include IR35, PI and employers insurance in the deal. I went with them because, after being on the bench for three years, I didn't want to go through all the hassle of setting up my own Ltd. only to have the contract finish after three months. I've been in nearly a year now, and found Giant good - they pay pretty fast (about a week behind), and the admin is so simple (and online). It's a good option if you're statring up, but I'll probably go back to my own Ltd (eventually).

[christhedon]

The Giant solution I was looking at was the Powerhouse, where they include all the things I laid out seperately in the costs of going LTD alone.

I've just thought of something else though...I have been permanent up to now and therefore I am in a high rate income tax bracket. I think this means that I will have to pay higher dividend tax (NB I don't mean corporation tax, I mean the tax on withdrawing the dividends). Having spoken to Giant I don't think they will cater for my scenario. Is that correct? Are there Composites that will? So, I may have to go Ltd and then draw some divedends next April I.e. within the next tax year. Is this a rational approach?

Thanks,

Chris

[hattra]

If you are already into higher rate tax for the year , it may be better to go for your own ltd and retain some of the profit into the next year. But I'm not an accountant, so don't take that as advice. Might be worth posting this on the Accounting/ Legal thread, or possibly on some other sites equivalent (though I'm sure they are not as good )

[tim123]

Ok

So I thought about the costs of using LTD and am laying them out in yearly figures:

1) Accoutant £1200
2) Accountant costs for dispenses £??? e.g. doing your reciepts etc.
3) Public and professional liability and personal indemnity insurance £300
4) IR35 contract review £100
5) IR35 contract insurance for expenses £200
6) Setting company up with Companies House £100?
7) Time spent doing the above £???

Total cost is about £1900.

Giant is 35*52= £1820.

Are my figures wrong / way off?

Thanks,

Chris

1) You should get an accountant for a lot less than 1500, including the cost of (2).

2) You still need PII when working through an umbrella, though they may include this.

3) (4) and (5) are effectively double counting. Working through an umbrella you will be taxed as if you were inside IR35. You can run a limited and be taxed inside IR35 and hence save costs (4) and (5) if you wish. Alternatively you can pay (4) and (5) and (hopefully) save some tax.

4) (6) is a one off cost, barely worth considering as relevent. The amount that I paid for my company has amounted to about 3 pounds pa.

4) Yes (7) is a pain. I don't believe all these people that say it takes them minutes a month. It takes me several hours. But it has to be done.

tim

[IR35 Avoider]

1) Accoutant £1200

Factor the flat rate VAT scheme into your calculations. Even though I work part time, I make over a thousand a year profit from the flat rate VAT scheme, which goes a long way to offsetting the accountancy bills for my company.