To employ or not to employ - that's the tricky decision

TheBigCheese_2

Hi everyone

I'm self employed and run my own business from home.

Recently I have secured a very large order which will keep me in work for two years working flat out at it. However I also have other work which needs my attention so I am thinking of bringing my partner on board to help out.

She is willing and keen to leave her job and work with me as we get on fantastically, will make enough to support both of us and love what we do.

The sticking point is we can't decide what will be the best way to go about it regarding legalities and keeping tax to a minimum etc.

We had thought of setting up a joint bank account for her and then in effect I will pay myself more each month and put it into the joint account for her.

Then we thought that she wouldn't be paying N.I contributions so thought being an employee might be the best method but it sounds rather complicated and I have seen in other places the advice has been to get an accountant to help out (an unwanted expense).

Then we thought about her being self employed herself and I would effectively 'outsource' (well pass across to her desk) the work that needs doing, she invoices me and I pay her based on what she does.

As you can see we are completely bemused and flummoxed by it so if anyone can offer any ideas, recommendations, insights...basically any words of wisdom at all we would be very grateful!

Many thanks!


P.S. Hopefully this post is in the right forum!

abbecer

Sorry i can't help at all. Just wanted to say that glad things are going well and i'm sure it'll work out fine.

Rebecca xxxxxxxxxxxxxx

cash99

There are a number of possibilities eg a partnership, trading as a limited company, your partner becoming an employee etc. All of which have pros and cons depending on your circumstances, and all of which need to be done in advance. Tax planning is very difficult to impossible when done in arrears.

You need to spend some money on an accountant to advise you, but in return they will save you more in tax and ni than they cost.

TheBigCheese_2

Thanks for the posts!

I've spoken to a "status manager" at the tax office and it seems the only way of doing it all above board is to set my missus up as an employee.

Not an ideal situation but I've been assured that if I can fill in a self assessment online I can set up a PAYE system as that's all online as well.

What fun :rolleyes:

WHA

Yes, but have you spoken to an accountant or business link adviser about the other options, i.e. bring her in as a partner, or as a co-shareholder/director in a limited company. HMRC won't give you tax planning advice - they'll just tell you how to fill in the forms. You could be missing a trick or two here if you don't get proper advice.