Reply to: New contractor looking for advice - Parasol or SCPay?

[Xtrain]

Does sound like a brolly pimp...

and they obviously avoided the question of which brolly they use!

[Ardesco]

Does sound like a brolly pimp...

ok thanks for all the feedback - looks like we are now having a proper discussion

lets talk insurances then

no employers liabiltiy/public liabilty or profesional indemnity - I am pretty sure you may need one or more of there to operate legally? what happen if someone decides to sue you company for negligence - ho hum saved £4k in tax paid £1million in costs......... cost of the whole lot £500 -£600 per year maybe? (anyone any ideas?)

If you bother with them about half that price, go with PCG and you can get them for under £200 (PCG Membership £220 + vat and you can easily get a 15% discount for your first year with a bit of google fu)

how about end of year tax returns - are these done for free by your accountant or do they cost - how much time is involved?

Done by my accountant and is included in the annual sum I pay him. Any decent accountant will do this.

are company bank accounts really free? i was reading another thread about natwest and that seemed to imply there were some charges involved?

Natwest are tulipe, have a look at the Cater Allen account CUK can set up for you (click money in right hand panel and look for it)

how about accountancy costs I was reading another thread where by someone was saying they did the account for about £50 - £60 per month - but if you have a query they charge you £25 per call (+VAT)

Rubbish, if this is the case they had a ddgy accountant and are being ripped off

no cost for calling your brolly (because you are an employee)

Phone call to my accountant is no more expensive than a phone call to a brolly, cheaper if the brolly are using an 0870 number...

which is really why i said do not use ltd for first year or so - you are bound to have questions and queries about the whole contracting shebang - is it not nice to know you can pick up the phone get some answers and not have to pay through the nose for it?

The problem is a lot of brollies give out incorrect information because thier staff aren't properly trained. i would rather talk to my accountant and be secure in the knowledge that the information is correct rather than spend half my life arguing with a brolly about how I do really need receipts and I can't claim the full dispensation they have every day no matter what they say....

also remember not everyone gets a big kick out of being able to say - I am a Director of my own company - when realistically you have set up a ltd company to do a bit of contracting........

your point is....

[Xtrain]

ok thanks for all the feedback - looks like we are now having a proper discussion

lets talk insurances then

no employers liabiltiy/public liabilty or profesional indemnity - I am pretty sure you may need one or more of there to operate legally? what happen if someone decides to sue you company for negligence - ho hum saved £4k in tax paid £1million in costs......... cost of the whole lot £500 -£600 per year maybe? (anyone any ideas?)

how about end of year tax returns - are these done for free by your accountant or do they cost - how much time is involved?

are company bank accounts really free? i was reading another thread about natwest and that seemed to imply there were some charges involved?

how about accountancy costs I was reading another thread where by someone was saying they did the account for about £50 - £60 per month - but if you have a query they charge you £25 per call (+VAT)

no cost for calling your brolly (because you are an employee)

which is really why i said do not use ltd for first year or so - you are bound to have questions and queries about the whole contracting shebang - is it not nice to know you can pick up the phone get some answers and not have to pay through the nose for it?

also remember not everyone gets a big kick out of being able to say - I am a Director of my own company - when realistically you have set up a ltd company to do a bit of contracting........

I really do think you are talking absolute pap!

In all my years of contracting no client or agency has ever asked for proof of insurances of any nature! Nor have I ever heard of anyone being sued inidvidually or their company. If they sue me...great..there is no money in my business, and there is no point sueing anyone or thing if it hasn't got any money. So insurances for me...nothing

I do my tax return online...cost nothing. If you do it before September the IR calc your tax for you. Btw most brollys DONT include a tax return service. Neither OrangeGenie or Parasol did when I used them.

Lloyds TSB...free business banking for first 2 years.

Accountant £1K per annum incl as many question as yer like.

Travel to work expenses - included

Dividends - included (I am outside of IR35)

So which brolly do you use which is so fantastic offering insurances, expenses, as many questions as you like, free tax return service etc?

[rootsnall]

no employers liabiltiy/public liabilty or profesional indemnity - I am pretty sure you may need one or more of there to operate legally? what happen if someone decides to sue you company for negligence - ho hum saved £4k in tax paid £1million in costs......... cost of the whole lot £500 -£600 per year maybe? (anyone any ideas?)........

The majority don't bother using the theory that if you aren't insured you aren't worth pursuing. Can't remember which on it is but one is a possible liability against you personally ( not the Ltd ) but I have never heard of anyone being caught out. One of the safer bits of insurance dodging I think.

how about end of year tax returns - are these done for free by your accountant or do they cost - how much time is involved?........

Done as part of the monthly fee. They do it and send it to you to check and sign, there shouldn't be that much on there to check to be honest as there isn't much scope for any creative accounting. You could spend an hour checking it if you want to be thorough.

are company bank accounts really free? i was reading another thread about natwest and that seemed to imply there were some charges involved?

Mine is free and pays 2-3% interest depending how much you have in there

how about accountancy costs I was reading another thread where by someone was saying they did the account for about £50 - £60 per month - but if you have a query they charge you £25 per call (+VAT)

Mine just went up to I think £65 (?) a month and I've never been charged any extras and make failrly regular calls.

If you earn a reasonable rate, and have fairly normal expenses, and sign up for the flat rate VAT scheme then your annual accountancy costs are effectively zero compared to a brolly. I think the flat rate VAT savings were worth quite a bit over a grand for me last year, total fees were a grand or so.

[jh0711]

ok thanks for all the feedback - looks like we are now having a proper discussion

lets talk insurances then

no employers liabiltiy/public liabilty or profesional indemnity - I am pretty sure you may need one or more of there to operate legally? what happen if someone decides to sue you company for negligence - ho hum saved £4k in tax paid £1million in costs......... cost of the whole lot £500 -£600 per year maybe? (anyone any ideas?)

how about end of year tax returns - are these done for free by your accountant or do they cost - how much time is involved?

are company bank accounts really free? i was reading another thread about natwest and that seemed to imply there were some charges involved?

how about accountancy costs I was reading another thread where by someone was saying they did the account for about £50 - £60 per month - but if you have a query they charge you £25 per call (+VAT)

no cost for calling your brolly (because you are an employee)

which is really why i said do not use ltd for first year or so - you are bound to have questions and queries about the whole contracting shebang - is it not nice to know you can pick up the phone get some answers and not have to pay through the nose for it?

also remember not everyone gets a big kick out of being able to say - I am a Director of my own company - when realistically you have set up a ltd company to do a bit of contracting........

[tim123]

I am not sure that it is a definition of a brolly right now, as home to work travel, subsistence allowance of upto £25 per day and accommodation if you are living away all helps to reduce your tax. But I am sure that will be the definition of a brolly after April!

I don't see that whether they include provision of expenses in the payroll has anything to do with the definition of a 'brolly'.

The difference between a pay-rolling company and a brolly is whether they take part in the employment chain or not. A pay-rolling company simply produces payslips and makes payments for a 'genuine' employer. These payments could include business expenses, probably based upon the 'real' employers dispenation (or lack of).

A brolly *becomes* your employer, and it is this, IMHO which makes it a brolly. A simple pay-rolling company is of no use to the individual contractor because there is no-one in the chain taking the part of the real employer (unless the client or the agent agrees to take on the role). So, if it takes on the legal entity of your employer, the pay-rolling company becomes a brolly.

tim

[The Lone Gunman]

Even if you are IR35 caught, and that is becoming less and less likely (Look at Shout99 MOO thread), the Ltd company is still the most tax efficient way to go.

It is not difficult to run a Ltd, nor is it difficult to set one up.
1 email to Simon or Darren (SJD and Upton) will have the job done for you.
I think SJD will set up a bank account, I know a couple of accountants who do.

A decent accountant will run your payroll and tell you how much to send for PAYE and NI every month.

You will need to spend a little time (1 hour per month it works out for me) doing VAT and expenses, but you would have to do the expenses with a brolly anyway.

[rootsnall]

how much does it cost for a LTD company set up?
how about insurances?
a company bank account?
what about the time and hassle involved in all of this when most brollies now have online registration which takes about 5 minutes?

I guess it is all a bit unknown for a newcomer hence some hastle but to answer the above,

how much does it cost for a LTD company set up? free
how about insurances? free - don't have any
a company bank account? free
what about the time and hassle involved in all of this when most brollies now have online registration which takes about 5 minutes? about an hour

With a decent accountant it really isn't much hastle. With a badly oprganised one it can be a nightmare, but same applies to brollies on that score.

Ongoing I reckon I spend an hour every 3 months on VAT and general admin, and 5 minutes a month invoicing. I don't bother with small expenses such as postage and telephone bills to keep things simple, leaving only mileage, hotels and any big items such as new PCs to keep track of.

[malvolio]

I do not work for a brolly but have been in and around agencies and payroll solutions for about 10 years - it seems when anyone comes on this board and asks what to do everyone shouts go Ltd without really consdiering (or remebering) what it is like to be a brand new contractor - just trying to redress the balance that is all.

It takes one day's effort and very little money to set up your Limited, especially if you use one of the half-dozen or so accountacy comapnies we keep reccomending that do it all for you. You then have the best and most tax-efficient vehicle for working as a contractor. Any other option was always more expensive, and as of April, those options are seriously limited anyway. That's why you get the consistent message - becuase it is the right answer.

And seriously, if setting up a company is too difficult to contemplate, how well are you going to cope as a contractor anyway? You don't get money for free, you have to put in a little effort of your own.

[jh0711]

If this is not spam I don't know what is!!! Which brolly do you work for? I used 2 PAYE brollys a couple of years back and lost over £4K in tax. The vast majority of ltd company providers now provide the ltd company setup free of charge and you can defo claim travel to work expenses AND maybe able to claim divvies (IR35 dependent of course). From April it is a complete no brainer...ltd is the only option (even if you were contracting only for a month!).

how much does it cost for a LTD company set up?
how about insurances?
a company bank account?
what about the time and hassle involved in all of this when most brollies now have online registration which takes about 5 minutes?
the majority of decent brollies do not charge a set up fee
if you contract is caught by IR35 (which if you work through an agency - which is what the majority of new contractors do) is pretty much a given then the benefit of using a limted company is vastly reduced.

I do not work for a brolly but have been in and around agencies and payroll solutions for about 10 years - it seems when anyone comes on this board and asks what to do everyone shouts go Ltd without really consdiering (or remebering) what it is like to be a brand new contractor - just trying to redress the balance that is all.

[LisaContractorUmbrella]

There is a lot of confusion regarding this new legislation at the moment but to help HMR&C have defined a managed service company here http://www.hm-treasury.gov.uk/media/...anies_faq1.pdf .

The legislation, as we understand it, will give contractors 2 options from 6th April - either to work through their own personal limited company over which they have complete financial control or to work through an intermediary and be paid PAYE. It has yet to be established what, if any, expenses contractors using an intermediary, such as an umbrella company, will be allowed to claim but contractors using umbrella companies have never been able to lawfully claim a daily subsistence allowance unless they work from home overnight or are on detached duty.

[rootsnall]

Sorry I didnt answer your question rootsnall. It would appear if you work through a managed service company (brollies included) then you cannot claim home to work expenses or subsistence expenses(including accomodation). However, there is nothing to stop you opening up a limited company, and paying yourself a salary and continuing to offset your business expenses against your income. In fact if you are caught by IR35, or dont have the inclination to battle the revenue then this is after April 2007 the best way to protect your income.

You will probably find that every brolly suddenly turns into an accountancy practice helping contractors run limited companies!! then everyone is in for a rough ride!!!

If you are with a brolly right now, I would start looking at a contingency plan for april 2007.

I have used a Ltd for years but like to keep up with what is going on and review the options. Due to working overseas and various other reasons I have closed a few Ltd's down over the years. My possibly incorrect thinking is that by keeping each Ltds lifetime to 2 or 3 years I am reducing the target and possible IR35 payout for any individual investigation. I was contemplating going with a brolly for a year and paying big pension contributions but for various reasons this doesn't seem to be a worthwhile option.

[Newby]

I am not sure that it is a definition of a brolly right now, as home to work travel, subsistence allowance of upto £25 per day and accommodation if you are living away all helps to reduce your tax. But I am sure that will be the definition of a brolly after April!

[tim123]

[QUOTE=Newby]In fact why not just go to a payroll company and pay £5 a week.
QUOTE]

Surely this is the definition of a 'brolly'?

tim

[Newby]

Sorry I didnt answer your question rootsnall. It would appear if you work through a managed service company (brollies included) then you cannot claim home to work expenses or subsistence expenses(including accomodation). However, there is nothing to stop you opening up a limited company, and paying yourself a salary and continuing to offset your business expenses against your income. In fact if you are caught by IR35, or dont have the inclination to battle the revenue then this is after April 2007 the best way to protect your income.

You will probably find that every brolly suddenly turns into an accountancy practice helping contractors run limited companies!! then everyone is in for a rough ride!!!

If you are with a brolly right now, I would start looking at a contingency plan for april 2007.