Originally posted by VectraMan
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Previously on "Probably really basic Ltd Co question from a beginner!"
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Originally posted by rm55 View Post
Edit to add:- my new contract is based very close to home so I'll probably be cycling to work, therefore no business mileage to speak of, and I doubt any other expenses to offset against tax either. I'll also be on basic rate income tax.
In fact even if you use an umbrella you can claim that rate. If the umbrella won't allow you to claim it then you can claim it on your tax return.
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Originally posted by rm55 View PostNewbie question Number 2: if I went Ltd would I *have* to register for PAYE, and if so would I still have to pay employers NI on this?
My company isn't currently registered for PAYE, but that's because I was a permie for the first 9 months of this tax year, so I've already paid enough PAYE to cover those. You may fall into the same bracket if you've been with an umbrella, in which case there's no point starting PAYE until April.
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Originally posted by rm55 View PostNewbie question Number 2: if I went Ltd would I *have* to register for PAYE, and if so would I still have to pay employers NI on this?
Originally posted by rm55 View PostQuestion 3: am I right that if I register for flat rate VAT, I can add 20% to my daily rate on the invoices I send, but I only have to pay back 14.5% thus giving myself a 5.5% pay increase over umbrella?
TBH, there's a lot more to having your own company than just running the numbers in a straight Umbrella vs. Ltd Co. comparison. Your best bet by far would be to speak to a few accountants and take it from there - most are happy to spend half-hour (or more!) for free explaining the options and answering "newbie" questions. Nothing wrong with doing your own research though.
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Thanks chaps, the above is kind of confirming that (based on a relatively low daily rate), it will in fact be cheaper and safer to stick with my umbrella co.
Edit to add:- my new contract is based very close to home so I'll probably be cycling to work, therefore no business mileage to speak of, and I doubt any other expenses to offset against tax either. I'll also be on basic rate income tax.
Due to the above I think going through an umbrella company will mean I take home less than if I was PAYE, but as this is not an option I'd hoped that setting up a Ltd might help, but it appears accountancy fees and indemnity insurance for the period of the contract could be about the same?
Newbie question Number 2: if I went Ltd would I *have* to register for PAYE, and if so would I still have to pay employers NI on this?
Question 3: am I right that if I register for flat rate VAT, I can add 20% to my daily rate on the invoices I send, but I only have to pay back 14.5% thus giving myself a 5.5% pay increase over umbrella?Last edited by rm55; 23 February 2013, 23:45.
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Make sure you do a lot of research in to running a LTD particularly the expenses side amongst quite a few others. You will become legally responsible for the company's finances and ignorance or lack of knowledge is not a defence. Read all the links on the right and make sure you understand them.
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Originally posted by rm55 View PostI may be starting a new 6 month contract in a week or 2 but my question is, if I were to form the company now, will I need to pay someone the above mention £600 in April this year, even if I've only been trading for 4 or 5 weeks?
You have to understand what's included in that price too, do they do IR35 reviews, VAT, PAYE and self assessment or is that just for the end of year accounts? I recommend that in the first year you don't skimp on accountants fees and that you get an accountant engaged from day 1 who is willing to work with you on a monthly fee to cover you for everything you need. You will pay a bit more but the fact is that if you go it alone then you could very easily make a big mess of your company's affairs and this could cost you thousands in avoidable tax and fines. A decent accountant up front should help you save you a lot of money.
Have a look at the list of recommended accountants thread. Most of these will have a website with lots of useful information and there is also the first timers guide on the right with useful links.
- Get an accountant who will work on a monthly fee so you can ask them questions whenever you want and they can deal with all the setting up, VAT, FRS, PAYE, etc, etc as and when they happen.
- Make sure they offer some system so you can see a daily running statement exactly how much of your company's money is profit that you can take as a dividend and how much is retained for corporation tax, VAT etc.
- Once you've done your first year's accounts and are comfortable with what you are doing, then you can consider doing your own admin/book keeping and just get an accountant to do your year end.
Oh, you will most likely also need Professional Indemnity and other insurances too. Check with your client/agency about this and do a search on the forum for where to get it.
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Probably really basic Ltd Co question from a beginner!
Hi, hope someone can help answer what is probably a basic question!
I've been contracting in IT for about a year using an umbrella company which means I've been paying roughly £55 each week in fees and employers NI. A colleague advised me to start my own Ltd company and said all he does is pay an account £600 once a year to do his annual return, and other than that has no fees.
I may be starting a new 6 month contract in a week or 2 but my question is, if I were to form the company now, will I need to pay someone the above mention £600 in April this year, even if I've only been trading for 4 or 5 weeks?
Many thanks.Tags: None
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