Self Employed or Employed??

trixxi

Hi,
I run my own business (self employed) and I am thinking about having my husband join me. At present he doesn't work and doesn't receive any benefits. I am trying to figure out what would be more beneficial for my husband and I against what would be better for the business. So really I'm hoping for some pros and cons for both, also whether my husband should be employed by me or should he just go self employed also.
I don't have an accountant (as I do my accounts myself) or financial advisor to ask at the moment.
Many thanks

ACG

You should invest in a good accountant.
Mine is there for everything - payroll questions, letters from HMRC I take a photo of and email it to him. He just replies bin or thanks, saves me SOOO much time and he also found ways to save me a couple of hundred in tax each year - ok, he costs more than that but he takes away so many headaches he is worth every penny.

If you are a limited company, you can earn about £11k tax free plus about£5k in dividends. My making your husband a director, he can earn the same and it is tax free. If he is employed you do not get that £5k dividend allowance.

If you are a sole trader it makes no difference.

That nswer is based on my understanding, I am not qualified to give tax advice so I would suggest speaking to an accountant.

trixxi

Thanks, its not a limited company.
We are still in the early stages i'm just trying to get a feel for things as he hasn't worked for so long and I would need to buy another vehicle etc, so trying to weigh up all the implications before I do anything!
I would love to have an accountant but its not a feasible outlay right at this moment.

Pennywise

It's not your choice to make whether he's employed or self employed. If he only ever works for you and does what you tell him using your equipment, it's virtually a matter of fact that he's your employee.

https://www.gov.uk/government/collections/employed-or-self-employed

trixxi

Not if he earns his own money and registers as self employed surely? If he was a partner in the business?

phill99

trixxi wrote: »

Not if he earns his own money and registers as self employed surely? If he was a partner in the business?

But then he would have to invoice his own customers. You couldn't do that for him. If you invoiced your / his customers, then he wouldn't be self employed as effectively he is only working for you.

trixxi

We could do it either way. I was looking for advice about the pros and cons for a couple both being self employed as opposed to one being self employed and one employed.
Can anyone offer any information about this or their own personal experience?

ACG

I am self employed (ltd), I have employees.
I could not imagine anything worse than working with my mrs. You just end up talking business and if you have an argument at home or at work, it then carries over. Added to that, if I tried to tell her what to do she would argue back and I know I would expect more from her than other employees which then makes it unfair on her.

The only way I would take my girlfriend on is if she was genuinely struggling to find another job.

HMRC dictates that if you have someone working for the business who has to be in certain places at certain times and uses the firms equipment - they are deemed to be employed, rather than self employed...It is a little more complicated than that, but that is the basic version. As you are married, the business could be seen as both of yours and so treated a little differently. Again, this is where an accountant would come in handy, but you can call HMRC and ask them the question. HMRC are not there to catch you out, you are calling to ensure you are doing things correctly.

As you are sole traders, from a tax perspective it makes no odds as far as I am aware if you are employed or self employed.

Best of luck with the business. Being self employed is awesome! I am sat at home, feet up on the couch doing some admin before nipping to the office (lie in, no rush hour traffic) however it is hard to switch off at night.

trixxi

Thanks!
My husband doesnt have great health so we are hoping he can go out to work a couple of days a week to start with and see how he gets on.
I have a dog walking and day care business and have built it up over a few years now. I am full and have a waiting list of people looking for a space so trying to figure out how best to grow my business, give my husband something to do and help the business.

Pennywise

No problem in converting your business into a partnership and you both being partners, hence both self employed but with a common business rather than two separate "businesses".

My earlier comment was in respect of what I assumed you meant of you keeping your own business separate and engaging your OH to do work for you in a self employed capacity, i.e. two separate sole trader businesses, which is where the employed versus self employed question came into it.