Limited company newbie!

[Maslins]

There is an argument that, just by being an office holder (director or company secretary) there is an entitlement to a salary or remuneration because of the responsibility of office rather than actual duties. HMRC seem comfortable with this but I haven't tested this personally.

I imagine in practice HMRC aren't going to challenge someone on a (say) £10k salary even where a spouse and reasonable evidence that tax is at least partly a motivator. It's hard for them to prove the person doesn't justify a modest salary level like, and it would also be quite rude for them to suggest it, "you're not worth that".

If it was a £50k salary and matching pension contribution then yes they may be more inclined to ask questions.

[Alan @ BroomeAffinity]

Hmmm...

Wife's salary would have to be commensurate with the level of work she does, so likely well under £10k. !

There is an argument that, just by being an office holder (director or company secretary) there is an entitlement to a salary or remuneration because of the responsibility of office rather than actual duties. HMRC seem comfortable with this but I haven't tested this personally.

[malvolio]

Bring your wife on board as a director & shareholder. She can then be paid for any work she does and not be an employee. Plus its much more tax efficient to take dividends split between you and her (assuming she has no other income and your dividends would take you personally into the higher tax band).

However employees liability insurance tends to come as a freebie with most public liability policies - so it doesn't;t really matter :-)

Hmmm...

Wife's salary would have to be commensurate with the level of work she does, so likely well under £10k. Split dividends is a good idea but the savings just got heavily reduced, with just £2k each tax free. The OP has to take expert advice aligned to their own particular situation, generic solutions may not be the best approach.

Insurance is easily bought, if you want cheap (as opposed to comprehensive if you work in some rather more risk sensitive area than most IT people) then google some suppliers and pick one. Cost shouldn't be an issue anyway, if you have to have it to secure a contract worth several tens of thousands...

And ditto accountants. Get one that understands your business (plenty of guidance on here somewhere) and listen to them. Plenty of time to DIY when you know how much you don't know!

[Waldorf]

Clearsky are now part of the big conglomerate which also includes Parasol, SJD & Nixon Williams. I'd avoid paying the inflated fees you've mentioned, Nixon Williams are cheaper at £95 but I've heard there not as good as they were.

Avoid the recommendations of the agency, they do get kick backs from the accountants, so hardly impartial.

[blacjac]

Hi Northernlad,

Thank you very much for the reply, you've confirmed a lot of what I was thinking.

The agreement I was looking at with ClearSky included the insurances, do you mind me asking who you'd recommend in relation to insurance?

I've been told I need the following:

£1 million professional indemnity
£1 million public liability
Insurance's for employees if you have any

With regards employees I'm not sure whether I'll include my wife to take a salary and assist with admin, etc.

Bring your wife on board as a director & shareholder. She can then be paid for any work she does and not be an employee. Plus its much more tax efficient to take dividends split between you and her (assuming she has no other income and your dividends would take you personally into the higher tax band).

However employees liability insurance tends to come as a freebie with most public liability policies - so it doesn't;t really matter :-)

[Andy Hallett]

Worth pointing out that IR35 still applies outside of the public sector!

In a lot of ways the risk is higher. In the public sector all the liability is with the company that pays you, in the private sector it's your neck in the line.

Get a decent accountant and understand what they tell you.

[Andrew@Wisteria]

Go for a modern accountant that uses cloud accounting (Freeagent) but more importantly find about what time they invest in saving you tax (which is really what you want to pay for). Many contractor accountants are sausage factories that will just process what you give them in FA with limited add-value/review process and just hand you your accounts. If that's the case then arguably you could do that yourself with the software available these days. Not necessarily easy to determine which type of accountant they are though. Some might be reflective in the price, but many are not!

[Michael at BI Accountancy]

That's good news on the public sector front!

Like NorthernLad says get an accountant in place to handle your affairs and you concentrate on contracting.

I'd say a lot of our clients could potentially handle there own affairs, the reason they don't is for the cost of our service and the amount of time you would have to invest into not only preparing and submitting accounts but keeping up to date with legislative changes it's a no brainer.

Get an accountant, let them help guide you on all the queries you will have and after you've done a full year if you feel that you could do it yourself then give it a go.

[lpop]

Not public sector!

[stek]

All bets are off though if the gig is Public Sector....

[northernladyuk]

Hi Northernlad,

Thank you very much for the reply, you've confirmed a lot of what I was thinking.

The agreement I was looking at with ClearSky included the insurances, do you mind me asking who you'd recommend in relation to insurance?

I've been told I need the following:

£1 million professional indemnity
£1 million public liability
Insurance's for employees if you have any

With regards employees I'm not sure whether I'll include my wife to take a salary and assist with admin, etc.

Finally, I can see from the thread you mentioned that you deal with Gorilla Accounting. I think I'll look into their services a bit more closely. I certainly think I need assistance and someone to ask questions of and their fee is much less than ClearSky.

It pains me to say it but the old man is right. Get a specialist contractor accountant and see if you fancy doing it yourself after the first year.

[lpop]

Hi Northernlad,

Thank you very much for the reply, you've confirmed a lot of what I was thinking.

The agreement I was looking at with ClearSky included the insurances, do you mind me asking who you'd recommend in relation to insurance?

I've been told I need the following:

£1 million professional indemnity
£1 million public liability
Insurance's for employees if you have any

With regards employees I'm not sure whether I'll include my wife to take a salary and assist with admin, etc.

Finally, I can see from the thread you mentioned that you deal with Gorilla Accounting. I think I'll look into their services a bit more closely. I certainly think I need assistance and someone to ask questions of and their fee is much less than ClearSky.

[northernladuk]

For a start forget the agents recommendation. They'll be on a kickback or something. Go out to market and find your own. I've put a thread together recommending people that we use and know on the forums at the top of this forum. They are all Freeagent Accountants so you'll get FA thrown in which is an excellent tool.

You are surprised you tried to get something for free but there is a catch that will cost you? Really? lol Many of them are a yearly charge spread over months and not a monthly charge. The detail is in the contract so check each one.

Even as a qualified management accountant I think you'd be better with an accountant for a decent period. You've got to get your head around your new role as a contractor and not a permie without worrying about all this stuff. You should also be earning more than enough to not even blink at the fee levels the FA accountants charge.

There are very very few people on here that do it themselves and even some of our very knowledgeable accounting posters have an accountant behind them. On that basis alone I'd say get an accountant.

I mean, who can I tell you to ask when you end up running your company via an online forum?

Also as a new company don't forget Insurances, contract check, Tax cover and many other things. The accountants fees are just a drop in the ocean...

[lpop]

Hello,

I am starting my first assignment on Monday through Reed and had been advised I could either get paid through an Umbrella company or set up my own limited company.

Having researched the options, I went for the limited company route and have set up my company through the companies house website.

Reed have recommended I go through ClearSky accounting to help manage everything myself but as a qualified management accountant I am tempted to try and manage things myself.

However, my head was turned by ClearSky's free trial period. My thinking being that I may as well have some help finding my feet and can always walk away. As I was about to sign up I was reading the T's and C's and there is a 30 day notice AND a £150 exit fee - I'm very concerned even if I went with a free trial, I'd end up spending at least one month's costs and the exit fee.

Does anyone have any experience in managing their limited company themselves without such a management company or the services of an accountant? I've been looking online for some resources to help advise what I need to do and when but every website I've found offers advice to a point and then offers to take care of everything for me for a small monthly fee!

Thanks in advance - all advice appreciated!