Newbie - Advice on Accounting options

[Support Monkey]

Definately go umbrella until you decide your sticking with contracting, i had 12 months umbrella then decided i was never going back permie so went ltd, as someone else said it will allow you time to concentrate on your first contract rather than worrying about how your paying tax.

This will also give you time to investigate/find out about accountants before you jump in and end up with some fly by night operation

And don't spend your life trying to compare umbrella companies, your only using them for a short period just go with one of the recommended ones on here

[LisaContractorUmbrella]

I dont see how umbrella is a better option, financially speaking. 40% of my pay would go on taxes whereas with ltd, it is around 20%. What really is involved during company start up and shutdown to make umbrella a viable option as you advised? Is it the paperwork? Does the expense involve hundreds and hundreds of pounds?

Thanks.

It will only be 20% if you are outside IR35. There will be costs involved in both set up and close down plus accountancy fees for the 3 month period which would outweigh the umbrella costs for the same period

[fdama]

If this is your first contract and it could only last 3 months you should perhaps consider going umbrella - Ltd Company start up and shut down within 3 months is a major headache and expense if you decide contracting is not for you

I dont see how umbrella is a better option, financially speaking. 40% of my pay would go on taxes whereas with ltd, it is around 20%. What really is involved during company start up and shutdown to make umbrella a viable option as you advised? Is it the paperwork? Does the expense involve hundreds and hundreds of pounds?

Thanks.

[Vandalay]

If this is your first contract and it could only last 3 months you should perhaps consider going umbrella - Ltd Company start up and shut down within 3 months is a major headache and expense if you decide contracting is not for you

Agree with this. I'm currently in the process of closing down a company, and it's a real pain and drawn out process. However if OP does want to go down the Ltd route, get yourself set up on FreeAgent.com and use an accountant listed with them... this would be the simplest option and gives you full transparency over your company's financials

[LisaContractorUmbrella]

If this is your first contract and it could only last 3 months you should perhaps consider going umbrella - Ltd Company start up and shut down within 3 months is a major headache and expense if you decide contracting is not for you

[Waldorf]

Hello all,

I am due to start a contract tomorrow at short notice as I was only offered the position last Friday. I have decided and been advised to go on the Limited company route. The contact will last approx 3-6 months. I don't know if I am breaking and rules here but I will say that the contract is worth a figure between £200-£400 a day.

I am just a bit overwhelmed and confused with all the information regarding the accounting that will have to be dealt with If I was to open a Limited company. My agency referred me to two Manchester based companies to contact (role and agenct based in Manchester), namely Paystream and Pinnacle Advantage. I have read a few negative posts regarding Paystream. I contacted both and both said to use the Limited company route. They both sent me figures stating how much I would make per month. There was around ~£100 difference between both their calculations.

Can anyone advise me how I should progress? I read on some of the contractor guides to use specialist accountancy firms. Are these companies mentioned specialist accountancy firms? The two companies I mentioned charge around £150 per month. I think one of them was charging £195 per month for their premium service. I just thought It would be wise to ask the experienced contractors on this forum for advice, before I sign up to something I'll regret. The problem I am facing is that I have not had a lot of time researching my options due to the short notice given to me.

Thanks in advance.

Sounds expensive, perhaps you should ask how much they pay the agency for the referral!

Never heard of pinnacle advantage, can't even find a website so I would probably give them a wide berth.

Paystream don't rate well on here, an old msc company I think and they don't seem as good as the regular accountants.

My accountant has this to see what you should be able to retain of your income - Contractor Accountant specialists UK | Accountancy Service for contractors | Interim Managers Accountancy Services UK | Take Home Pay Calculator UK.

[kaiser78]

May be an idea to go through an umbrella as will be easier and less effort intense for you in the initial period so you can concentrate on coming up to speed with ltd co workings and sort out your accountant.

[northernladuk]

Don't restrict yourself to local based umbrella's. I never had the need to visit one when I was with one. All done over the phone.

Here is a guide to brollies...

Using an Umbrella Company - Umbrella Guides :: Contractor UK

Here is the UK awards showing the best voted brollys

CUK Reader Awards 2011 - at a glance :: Contractor UK

[fdama]

The PCG have an accountant directory. They list only firms that have been accredited by PCG, meaning they should fully understand freelancers, IR35, etc. This is how I found my current accountant.

Regarding the 2 companies I listed, are they considered specialist accountants? Is the fee that they charge reasonable (see original post) ? I ask this because I read that you should be charged no more that £100 per month for their services. These companies are charging a higher rate. I'm just really unsure what to do next and who to go with, providing I must sort everything out today as it is the first day of my contract.

I'm guessing that these companies (Paystream and Pinnacle Advantage) are not traditional accountants. Am I correct in this?

[CheeseSlice]

The PCG have an accountant directory. They list only firms that have been accredited by PCG, meaning they should fully understand freelancers, IR35, etc. This is how I found my current accountant.

[fdama]

Hello all,

I am due to start a contract tomorrow at short notice as I was only offered the position last Friday. I have decided and been advised to go on the Limited company route. The contact will last approx 3-6 months. I don't know if I am breaking and rules here but I will say that the contract is worth a figure between £200-£400 a day.

I am just a bit overwhelmed and confused with all the information regarding the accounting that will have to be dealt with If I was to open a Limited company. My agency referred me to two Manchester based companies to contact (role and agenct based in Manchester), namely Paystream and Pinnacle Advantage. I have read a few negative posts regarding Paystream. I contacted both and both said to use the Limited company route. They both sent me figures stating how much I would make per month. There was around ~£100 difference between both their calculations.

Can anyone advise me how I should progress? I read on some of the contractor guides to use specialist accountancy firms. Are these companies mentioned specialist accountancy firms? The two companies I mentioned charge around £150 per month. I think one of them was charging £195 per month for their premium service. I just thought It would be wise to ask the experienced contractors on this forum for advice, before I sign up to something I'll regret. The problem I am facing is that I have not had a lot of time researching my options due to the short notice given to me.

Thanks in advance.