Going Limited

[Wobblyheed]

I would think that on ~£30/hr it would definitely be the right choice to go Ltd Co. Also registering for the FRS VAT scheme will typically boost your effective turnover by typically 5.5% for doing nothing.

I agree....and the OP's concern about "hefty accountancy fees" I feel are unfounded as he should be looking at how much his Umbrella is charging first.

[Fred Bloggs]

I would think that on ~£30/hr it would definitely be the right choice to go Ltd Co. Also registering for the FRS VAT scheme will typically boost your effective turnover by typically 5.5% for doing nothing.

[SueEllen]

You do need to understand IR35 and get professional advice on this if you are going to make a LTD company work properly though.

While rickom should get some professional advice some reading around the subject will help his/her understanding.

For starters over on the right hand side is a CUK Navigation panel. It contains loads of links. The best one to start with is "First Timers"

S/he can then google for PCG (Professional Contractors Group) and giving an email address can get also get another first timers guide and other information.

Finally SJD Accountancy (google for that name) also have a contractors guide.

[Wanderer]

after what amount does it start becoming tax efficient ? Since i am assuming the accountants would be having a hefty fee.

I think about £150/day or £30k/year is around about the cut over point. Running a company has certain obligations that some people just don't want to take on so it depends on your circumstances.

At £250 a day you are going to be hitting the higher rate tax bracket so there are definite advantages to going LTD especially if you don't need all that money immediately as you can retain some in the company for a lean year when you are below higher the rate tax limit.

Get on to one of the LTD vs umbrella calculators and see how you save by going LTD, it would be substantial and make the accountant's fees look like a drop in the ocean.

You do need to understand IR35 and get professional advice on this if you are going to make a LTD company work properly though.

[NotAllThere]

You do not pay to be VAT registered. Otherwise - do as SueEllen suggests.

[SueEllen]

The business link website has a very good guide to VAT I suggest you read it to get the basics Business link VAT

Lots of contractors who run limited companies are on what is called the flat rate scheme for VAT. The idea of the scheme is to make VAT easier for small companies/sole traders. If you google the words "HMRC vat flat rate scheme" you will get a link to the HMRC pages on it.

While your accountant can do your VAT calculations for you it's a good idea for you to know how to do it yourself as it's very easy. Plus the HMRC VAT helpline is very helpful.

BTW I could answer your question directly but it's a good idea to know where the resources are to get the answers to run your business just in case your accountant turns out to be unhelpful or worse, or you cannot get an answer on here for any reason.

[rickom]

Well if you're not VAT-registered, you will be paying the VAT on accounts and other fees, making them 20% more expensive than if you register.

I am not aware of any reasons why you wouldn't register for VAT if you go Ltd, but your current contract leaves your turnover low enough that you might have the choice.

Are you referring to the idea of starting a limited and registering this limited for a VAT exemption ?

I am unfortunately not well-versed with the tax structure. I would definitely need guidance on this ; which is where i am assuming the contractor-accountant would come in.

So if i understand correctly by registering for VAT , One pays 20% less for any of the services which can be tax exempt ?
The catch being , you pay to get VAT registered ?

Sorry if i sound mixed up, it is because i am

[d000hg]

Well if you're not VAT-registered, you will be paying the VAT on accounts and other fees, making them 20% more expensive than if you register.

I am not aware of any reasons why you wouldn't register for VAT if you go Ltd, but your current contract leaves your turnover low enough that you might have the choice.

[rickom]

Cheers mate!

I am not sure i understand VAT is another issue to consider

Is this relevant to the fees paid out to the consultants or in any way related to my pay ?

[d000hg]

An accountant should cost you £60-120 per month + VAT. Sent you a PM.

VAT is another issue to consider...

[rickom]

Hello All,

I recently started my first contract about 2 weeks ago. Given everything flew at the speed of light , it "felt" right to start under an umbrella.So i am with an umbrella at the moment.

I am currently pulling 250 quid a day for my contract & would like an opinion if going limited is the best way about.The contract is currently up to December & most likely to be extended. I have run through the guides to the right & it does say more tax efficient but after what amount does it start becoming tax efficient ? Since i am assuming the accountants would be having a hefty fee. Can i get a general ball-park figure for a contractor accountant? ( My services are of a software developer if that helps in narrowing it down any way).

I would also like to take this chance and ask you guys about any good contractor accountants you have come across (in the london area). I presume that is pretty much all that is required to get one sorted?

Cheers!
Rick