Becoming Self Employed - Advice

centrino2310

Hello

I have been offered a contract for 6 months doing administration and marketing work from home, on the premise that I become self employed and I am hired as a contractor for that company. However, I am a bit in the dark of what I have to do in order to become self employed so I was wondering whether anyone can give me a checklist of things I need to do to make sure what I am doing is all above board, i.e in regards to the type of bank account I need, what to do about National Insurance, Tax, Student Loans. It will be only me that is involved, no businesses will be set up

Thanks

HappyMJ

To appear legitimate you really need to set up a limited company providing admin and marketing services to clients and preferaby to more than one client. If you were to be a sole trader then it's more likely the HMRC will ask you or the client to pay more tax.

Your company will need insurance. Maybe professional indemnity? Public liability and employers liability is a must.

You should get an accountant. You would pay yourself an amount of money each week equivalent to the secondary threshold of NI which is £144 a week this tax year and therefore you won't be paying NI but will be credited with NI contributions. You then pay the remainder of the company profit as a dividend....again this minimizes tax and NI and maximizes your take home pay.

Lagoon

I wouldn't agree with the above advice. Setting up a limited company can be costly, and isn't something you want to do for a six month contract if that's all you're doing. Unless you're earning a lot of money, or buying/selling items with VAT, you'll save money by just becoming self-employed.

All the details are here: http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm

You'll want professional indemnity insurance, which protects you against complaints about work carried out, and any client losses as a result of your work or advice.

You also don't need to pay for an accountant if you're just earning money, working self-employed. Keep the money for yourself, set 20% aside in a separate bank account and you'll fill in your tax assessment form once a year. It'll be sent out automatically - just ensure that you have a record and evidence of your income and any work-related outgoings. Unless you're dealing with a complicated cash flow, you don't need someone else to do that maths for you. If you're just being paid for office work, it's not likely that'll be the case.

phill99

HappyMJ wrote: »

To appear legitimate you really need to set up a limited company .

What absolutely stupid advice. Really stupid. Most tradesmen in this country run as sole traders, not limited companies.

Having had my own company and been self employed there is no difference in public perception between a sole trader and a limited company. Most people don't know the difference.

A limited company is far more administration to deal with, far more costly to run in accountancy fees and has no perceivable tax saving.

Certainly DO NOT set up a Limited Company if you have only got a 6 month contract.