Reply to: Contracting V Plates

[northernladuk]

Haha. Lots of reassuring feedback then.

Out of curiosity how many of you have actually done this on your own?

I am earning nowhere near the sort of money where this becomes a pitfall imo. I'm on less than £150 per day. So every penny counts - unless you think £330pa is £330 per month.

Also - thanks for the tip about personal and company money. Genuine comment on my part. Just wondered if there were any benefits to routing through company based on the large amount it takes to startup something like this.

Still more than enough to incur some hefty fines for getting it wrong.

By the way.... If you are bringing in something around £30k a year then there is little benefit being LTD over brolly. Anything less than that it's better brolly and a large grey area between £30k and about £40k where the brolly is ever so slightly less tax efficient but much much easier to run......

[Wijay@WISAccountancy]

Haha. Lots of reassuring feedback then.

Out of curiosity how many of you have actually done this on your own?

I am earning nowhere near the sort of money where this becomes a pitfall imo. I'm on less than £150 per day. So every penny counts - unless you think £330pa is £330 per month.

Also - thanks for the tip about personal and company money. Genuine comment on my part. Just wondered if there were any benefits to routing through company based on the large amount it takes to startup something like this.

Hi Noobs,
When you appoint an accountant you need to check whether they offer free company formation (you should have saved £240), fixed fee for all the services (PAYE, VAT, Annual Accounts, Corporation tax return and Self assessment return). Some accountants also offer free IR35 review. I think you need to ring up your accountant again and ask whether he could do all this for you. Approx average market cost is £900+VAT p.a.
Wish you all the very best!
Thanks
Wijay
WIS Accountancy Ltd

[stek]

£240 to reg a company? Rip off - it's £40 and free with a proper accountant.

[pr1]

you say you're on less than £150 per day - how much do you think an accountant earns?

how much time/help/effort are they going to give you for £330 across a year

[Noobs]

Haha. Lots of reassuring feedback then.

Out of curiosity how many of you have actually done this on your own?

I am earning nowhere near the sort of money where this becomes a pitfall imo. I'm on less than £150 per day. So every penny counts - unless you think £330pa is £330 per month.

Also - thanks for the tip about personal and company money. Genuine comment on my part. Just wondered if there were any benefits to routing through company based on the large amount it takes to startup something like this.

[pr1]

[NotAllThere]

So I pretty much ignored everyone's advice and went limited. ...

In the 90s ltd was what everyone did. We didn't even have t'internet to help us.

[Alan @ BroomeAffinity]

If you think £1200 pa is expensive wait and see what the £330 pa accountant will cost you.

[northernladuk]

You think 330 per month is a good deal? How much time would you give your client for 330 quid? About 5 hours? You think your accountant can help you with your finances in 5 hours a year?? Seriously??? Most decent accountants charge about 240 per month which is a good deal(ish).

Your limited company money and your personal money are completely separate things. If you are going to do something personally use personal money, do something company related use company money. Do not confuse the two. The money in the limited is NOT yours until you bring it out through the normal channels.

Time to listen to some advice?

[Noobs]

So I pretty much ignored everyone's advice and went limited. In for a ride I s'pose.

So it will be quite interesting to see how things pan out over the next 18 months. I found a good accountant who is going to do my paye scheme for £20+vat per month paid quarterly and £90+vat to once over my annual tax returns prior to sending them off. I phoned around and some of fees quoted seemed atrocious.

So in all I paid £240 to reg company plus a predicted annual of £330+vat to accountant. as apposed to £25-28 per week going umbrella which would have been in the region of ~£1450pa. We'll see if its worth the pain in 12 months time. I'll keep this thread going so I can give some advice on if this was a bad decision on my part or worked out okay in the end. I think savings like this are important to try and make when your earning <£50Kpa... my heart just wont let me pay someone 4 figures for something i can do myself. Even if I have to learn the hardway or pay for mistakes - I envisage I'll be better off financially(hopefully!!)

Now I am also thinking of buying a house OR developing a gambling/fantasy sports site in my free time which will cost me in the region £90-130K either way and I am 50/50 on what I do. Mainly depends on the lending side things which I dont think will work out from a house purchase perpective.

I do have a question though, do you guys think I should pay for the software through my limited company? this money will be from my own personal money - not contracting income. Appreciate any advice on this... happy to provide more details.

[Eirikur]

First contract: Always go umbrella.
If you like contracting: When contract gets renewed or on your next contract go limited AND get an accountant

[tractor]

....

Hey

So I have been looking around the forum and this appears to a great resource about contract working, I have just secured my first ever contract in an engineering company on my doorstep after 10 years of working in the Banking industry. And looking to make the most of time as a contractor and not leak any juice unesscessarily on my virgin voyage as a contractor.

A couple of questions;
1. Is it worth paying c. £20-£30 per week to an umbrella company or to an accountancy to form a ltd company?
2. If I incorporate myself, am I letting myself in for a huuuuge headache?

Really appreciate any comments or links to good threads. I am trying to soak up as much as possible.

Thanks very much

All the threads here are good! Links are to your right for first timers about just anything you will need.

I have a serious question. Do people really, seriously not look into all this before they make the jump into career changing decisions?

[pr1]

for a £20/h contract (i.e. you're unlikely to exceed the basic rate tax band) and being tentative about the amount of hassle you should go umbrella, it will mean you don't need to worry about ir35 plus all the hmrc paperwork that comes with being a director of a company. An accountant (which you'd definitely need with a limited company as a newbie) is around the same as the umbrella fee anyway (£25/week £100/month, ish)

[Scrag Meister]

As others have said if this is a tentative step into contracting then go with an Umbrella for now and see how you get on.

If this is definitely a permanent change then get an accountant and get limited, you'll pick up what needs doing as time goes on, and most accountants are happy to talk you through anything you need to know..

Congrats on the contract and Good luck

[Michael at BI Accountancy]

If you're just dabbling in the world of contracting, I'd go umbrella. It's much easier (far less admin), though you'll typically pay a bit more in tax.

If you're confident you'll be contracting reasonably long term (ie minimum a year), may well be worth incorporating a Ltd Co from day one. I'd suggest even with an accountant on board it'll be a fairly steep learning curve.

Legally speaking you can go Ltd from day one without an accountant...but IMHO (and yes I may well be biased, but I'm sure many long term contractors on here would agree with me) you'd live to regret that decision.

As above. Depends on the length of time you are going to be contracting, amongst other factors that you need to consider such as; Day rate, IR35 status, legal obligations etc.