Limited Company, Key points

[cojak]

You are thinking like a permanent employee, not a business.

Contract checking and negotiation is not a hefty fee - it's a reasonable fee for peace of mind.

Every contract is different, each will have twists in the tail.

Contracts may be of a certain duration but contractors should be hired for the production of deliverables/products (modules, applications etc). Not Bums on Seats 'how long is it till 5pm?".

We still care about IR35 - not to care shows negligence.

You might be inside IR35, nothing in your post suggests otherwise.

[farazfastian]

Well thats ok, but one thing i dont understand why you should pay such a hefty fee for just checking you are outside IR35. I think my contract is a simple one there's no complications in it, i believe majority of the IT related contract works in a same way. So if a contract like this one is outside IR35 then others should too (similar ones).
Btw if that's just a single thing can make you inside IR35 i.e. your client is controlling you then majority of the contracts should be inside IR35 because normally IT related (programming etc) contracts spans a peroid instead of tasks, you works on client premises and in their control (although i can understand that normally they hire for a particular project but still the contracts used to be based on duration), so i believe people are not caring much about IR35 issue. what do you say?

[Bluebird]

Your outside IR35. But seriously I have zero qualifications to make that judgement on.

Get the contract reviewed by these people.

http://www.bauerandcottrell.co.uk/services.asp

AND your "working practices"

remember the three most important things...

Right of Substitution
MOO
and Client Control

If you can't demonstrate ANY of these - you are INSIDE IR35 regardless of what you contract says.

[Sockpuppet]

I've been offered 300 per day contract for the period of 6 months (bright chances of extension to 1 year), I'll be working as a developer in an IT firm. so now tell me am i outside IR35?

Your outside IR35. But seriously I have zero qualifications to make that judgement on.

Get the contract reviewed by these people.

http://www.bauerandcottrell.co.uk/services.asp

[farazfastian]

Thanks for the replies, I'll research on rest of the factors but still this IR35 thing is bugging me out, the way you guys have mentioned it looks like my contract is inside IR35 and i can't work with limited company in the way i explained. But really i wonder how majority of the people doing that as majority of IT contract are similar and people are doing the same way as I've explained. So i'll as ak simple question

I've been offered 300 per day contract for the period of 6 months (bright chances of extension to 1 year), I'll be working as a developer in an IT firm. so now tell me am i outside IR35?

Anyway thanks, I'll explore all the factors again and come back.

Regards
Faraz

[Sockpuppet]

This has to be a troll.

[philip@wellwoodhoyle]

Agree with all the above, BUT, some accountants do the company formation free of charge and the price quoted is on the high side - plenty charge in the range of £65-£85 per month, and some don't charge vat on top which gives you a real saving if you're not VAT registered or are on the flat rate vat scheme.

[Bluebird]

reply

see below...

- setup a limited company with the help of Accountant do this yourself - search internet about £30
- be the director of the company on company payroll
- keep myself a low salary i.e. around 20k and rest will take as dividend provided you are working outside IR35
- assign my home as company office and appoint my friend as a company secretory Friend ? You could use your accountant if you've no "friends"
- claim around 800-1000 (per month) as company expense only genuine expenses - your accountant will tell you what you can and cannot claim ask about 24month rule.
- have a contract signed among my client and company for 6 months ??
- handle monthly payroll for the director i.e. Employer/Employee NI contribution etc via Accountant yes
- take fix dividend (after applying 19% corporation tax) every month on the profit as director rest will keep in the company account now 20% - be caerful you don't exceed the persoanla limit £38k
- file on financial year end Annual Return, Tax Return etc via Accountant

Questions:
- In above case am i self employed or employed? employed
- With above setup am i IR35 compliant? can't say - it's about the job you do not how the co is set up.
- Should i register for VAT as my contract value is above 61k per annum BUT at the moment contract period is of 6 months and i dont know the future? use FRS
- If i extend my contract with the same client further 6 months, will it effect my IR35 status? or will there be any problem? 24months for expneses ir35 is about the way you work not how long you do it for, but to be on the safe side avoid long periods
- If i move to permanent job after 6 months, what issues i'll face in filing financial year end returns? none you just have to pay an accountant to do it
- Accountant is charging 1200-1500 pound per annum for all is it ok? reasonablish
- Last but not least am i playing safe? - are you using a condom ?

Regards
Faraz

[malvolio]

Thud thud thud

http://www.contractoruk.com/first_timers/index.html

http://www.pcg.org.uk/cms/index.php?...ownload&gid=27

Please don't tell me you've read them. There are so many errors in your questions that you can't have done.

[Vito]

Register for flat rate VAT now...that way you make a nice tidy profit

Accountant is very expensive...much more cost efficient options offered by some on this board

You can be a Permie and also have a company so going permie again after 6 months makes no odds

IR35 is decided on the basis of each contract and not on the way you set up your limited

Salary of £20k is too high

Go for QTRLY dividends and not monthly

[farazfastian]

Hi guys,

After investigating contracting options, i'm going for Limited Company and have understand following, plz do correct me if i'm wrong somewhere and answer my questions in the end. Many Thanks

In order to go for Limited Company option i'll

- setup a limited company with the help of Accountant.
- be the director of the company on company payroll
- keep myself a low salary i.e. around 20k and rest will take as dividend
- assign my home as company office and appoint my friend as a company secretory
- claim around 800-1000 (per month) as company expense
- have a contract signed among my client and company for 6 months
- handle monthly payroll for the director i.e. Employer/Employee NI contribution etc via Accountant
- take fix dividend (after applying 19% corporation tax) every month on the profit as director rest will keep in the company account
- file on financial year end Annual Return, Tax Return etc via Accountant

Questions:
- In above case am i self employed or employed?
- With above setup am i IR35 compliant?
- Should i register for VAT as my contract value is above 61k per annum BUT at the moment contract period is of 6 months and i dont know the future?
- If i extend my contract with the same client further 6 months, will it effect my IR35 status? or will there be any problem?
- If i move to permanent job after 6 months, what issues i'll face in filing financial year end returns?
- Accountant is charging 1200-1500 pound per annum for all is it ok?
- Last but not least am i playing safe?

Regards
Faraz