First Time Contracting and Brollying Tips

[cilurnum]

Hi All,

I've currently got myself a six month contract and apprehensively looking around at umbrella companies and wondering whether the limited company route would be an option. Is running one contract through a limited company worth it? I have some standard hours I need to be on site but I have no security beyond six months. I have no idea yet whether this would sit inside or outside of IR35 yet.

It's reasonably likely the contract would get extended, but, it may not and I also may decide to go back to permanent employment. In all honesty if I set up a company I'd like to give this more thought than I currently have time for with my start date and set up later. If I put my contract through an umbrella for six months then got an extension beyond that would there be any difficulties (HMRC, IR35 etc.) in incorporating that and then running my new contract through that?

[Fred Bloggs]

Yes it is, certainly for a six month contract, as long as your rate is reasonable and you're outside IR35.

[northernladuk]

Nothing wrong with going brolly for your first gig if you are unsure. Before T&S the general consensus was anything around £30k was better to go brolly anyway. You'll be earning more than that but not a massive amount. If you are going to stay contracting the difference over your career will be peanuts. I wouldn't be overly bothered it's a little inefficient for 3 months until you get to grips or have some peace of mind. I went brolly for my first gig and I have no regrets.

Have a word with Lucy and the gang at Contractor Umbrella. She posts a lot in here and is very helpful so run some numbers with them and sew how you feel.

[Matt FPSGroup]

A limited company is a longer term commitment. If there is the potential for you to go back perm in 6 months, an umbrella company is probably best for you initially. Once you have decided whether the contracting life is for you, a limited company may be a better solution and is definitely worth considering if you are outside IR35. You can pay for a contract review to give you an opinion on your status for that assignment.

[Fred Bloggs]

Look at the taxes you'll pay under a brolly, PAYE + ERNIC + EENIC, and the brolly margin. Then look at what taxes you'll pay under a Ltd Co + Qualifying expenses claims + Accountants fees. Then factor that for how long the contract will last, the decision will be easy.

[northernladuk]

Look at the taxes you'll pay under a brolly, PAYE + ERNIC + EENIC, and the brolly margin. Then look at what taxes you'll pay under a Ltd Co + Qualifying expenses claims + Accountants fees. Then factor that for how long the contract will last, the decision will be easy.

Where as that is true and easy for us to say you are missing the soft factors about the OP's level of ability, the hassle factor, his attitude towards understanding things like IR35 and so on. I don't think it's always as black and white as that personally, but really down the OP to decide.