Operate as limited company rather than employee?

newfoundglory

Can someone offer some advise -

I have been under the impression, from somewhere (cant remember exactly), that if you earn £25,000 a year (or more) its worth starting a limited company in your own name and operating as such rather than being an employee of some other company.

I work for a small business as it is, and I currently get a payslip and company pays various extras on top etc (NI contributions). I have wanted my own company for a while now. I think my existing employer would pay me more if I had a company and invoiced as though I were a consultant/contractor, as it itself would save money by allowing me to do so.

I dont NEED a salary each month, and figure I could live off paying myself dividends every 3 or 4 months from my own company accounts, as I have enough savings to live off. As I work in computers it would be useful to purchase equipment/software I need less VAT.


Questions I have are:
- is this a good idea?
- what have I missed about this/implications/any catches?
- would I need a business bank account/how else can I keep personal cash separate?
- approx accountants fees? (but would like to learn how to do my own books)
- am I likely to earn more/pay less tax via this route?
- lastly, whats the easiest way to go about setting all this up.

LittleVoice

Can you send in someone else to do the work you do for your employer?
Where do you do the work?
What hours does your employer require you to work for him?
Who owns the equipment you use to do your job?

newfoundglory

Hi!

It is possible to send in someone else to do my job - it is specialised to some degree - unfortunately i wouldnt send in someone to do the work for me - I was going to register Firstname Surname Ltd, and make myself the director and only employee of the limited company.

I would do the work at my current office (my current employers office), and I would not generally work from home but i can sometimes. I may work from home rarely when doing freelance work. I also carry out my job at locations other than my office, such as a datacentre.

Currently work between 8 and 9 hours a day, 5 days a week. However due to the nature of the industry I work in I am sometimes required to jump out of bed at 3am, work at weekends, and I do work unpaid overtime.

Employer currently owns equipment I use to do my job. However I often use my own equipment, and I would need to purchase additional/my own equipment in order to do freelance work outside main job.

I am aware I would have to pay myself a "basic" salary. I am also aware of the existence of IR35 and have no idea whether it would apply to me.

Debt_Free_Chick

Problem is that you cannot just become a consultant in the way you propose. HMRC will almost certainly deem that you are employed (you work for one employer, at their offices, using their equipment etc) and will require the employer to tax you under PAYE.

I have been under the impression, from somewhere (cant remember exactly), that if you earn £25,000 a year (or more) its worth starting a limited company in your own name and operating as such rather than being an employee of some other company.

A mis-quote, I think. This suggestion would only apply to those who are self-employed and running their own business - not to those who are employed.