Starting Off Contracting.

Marcon

prowla said:

No holiday pay

Beware of umbrella companies

Delay between (monthly) invoicing and (30 days) payment

VAT registration

Company annual statement

VAT registration - only applies if turnover is upwards of £85K a year. Flat rate scheme makes it very simple if turnover is no higher than £150K a year https://www.gov.uk/vat-flat-rate-scheme
Company annual statement - presume you are referring to confirmation statement at Companies House. Cost £13, takes about 30 seconds to file online.

In short, neither of these should be a deterrent.

DullGreyGuy

Wyndham said:

I haven't got my own company, but use an umbrella company instead. I looked into setting up my own company, but I'm making significant pension contributions, and with the tax relief on those, corporation tax instead of income tax, and a couple of other bits, the maths didn't quite work out in my favour, and I knew it would be a certain amount of hassle! An accountant helped me to reach that conclusion, and it was certainly a useful conversation to have.

Have to say it sounds like you got bad advice... there is a simplicity of using umbrellas and for some that may be worth the lower money but have never seen any cals that show an umbrella being close to a PSC. Assuming you'd be extracting all profits from the company to be equal to an umbrella then the pension contributions save both corporation and personal taxes

Marcon

DullGreyGuy said:

Wyndham said:

I haven't got my own company, but use an umbrella company instead. I looked into setting up my own company, but I'm making significant pension contributions, and with the tax relief on those, corporation tax instead of income tax, and a couple of other bits, the maths didn't quite work out in my favour, and I knew it would be a certain amount of hassle! An accountant helped me to reach that conclusion, and it was certainly a useful conversation to have.

Have to say it sounds like you got bad advice... there is a simplicity of using umbrellas and for some that may be worth the lower money but have never seen any cals that show an umbrella being close to a PSC. Assuming you'd be extracting all profits from the company to be equal to an umbrella then the pension contributions save both corporation and personal taxes

My reaction too! Accountants aren't always the greatest when it comes to treatment of pension contributions...

Might be a conversation worth reviewing/revisiting, since that's quite an unusual conclusion to have reached. 

Bod_1234

So update on this.  Have my ltd company set-up, bank account in progress, need to sort out liability insurance, and then I'm ready then go.

I've decided to attempt to do books myself, went with NatWest Mettle, as it comes with an app and freetrade fiance app to help with tax returns.  

I have no idea how PAYE works, but I figure I will find out soon enough, when it comes to setting my wage.

Any other tips gratefully received.

Bod_1234

DullGreyGuy said:. Assuming you'd be extracting all profits from the company to be equal to an umbrella then the pension contributions save both corporation and personal taxes

Can you explain this in numpty language please?

DullGreyGuy

Bod_1234 said:
need to sort out liability insurance, 

You haven't said what you will be doing but many contractors require professional indemnity insurance which covers bad advice as well as Public/Employers Liability insurance which covers physical damage to people or property

Note that PI insurance is on a "claims made" basis unlike say Motor which is on a Date Of Loss basis. This means you claim off the insurance in force at the time of the claim not at the time the incident which has lead to the claim. As a consequence you may need to continue insurance for at least a few years after stopping doing the freelance work.

Marcon

Bod_1234 said:

So update on this.  Have my ltd company set-up, bank account in progress, need to sort out liability insurance, and then I'm ready then go.

I've decided to attempt to do books myself, went with NatWest Mettle, as it comes with an app and freetrade fiance app to help with tax returns.  

I have no idea how PAYE works, but I figure I will find out soon enough, when it comes to setting my wage.

Any other tips gratefully received.

Suggest you do a bit of figuring sooner rather than later! Excellent free (HMRC) software makes actual payroll a doddle: https://www.gov.uk/basic-paye-tools

Bod_1234

DullGreyGuy said:

Bod_1234 said:
need to sort out liability insurance, 

You haven't said what you will be doing but many contractors require professional indemnity insurance which covers bad advice as well as Public/Employers Liability insurance which covers physical damage to people or property

The agency I am going through helpfully stipulate what types and limits I need:

Employers Liability (£5m)
Public liability (£2m)
Professional Indemnity Insurance (£1m)

DullGreyGuy

Bod_1234 said:

DullGreyGuy said:

Bod_1234 said:
need to sort out liability insurance, 

You haven't said what you will be doing but many contractors require professional indemnity insurance which covers bad advice as well as Public/Employers Liability insurance which covers physical damage to people or property

The agency I am going through helpfully stipulate what types and limits I need:

Employers Liability (£5m)
Public liability (£2m)
Professional Indemnity Insurance (£1m)

Its your choice on the EL, many agency agreement state its required but if you are a sole trader or the sole director/employee of a company you own there is no legal requirement for it and there is no one that can make a claim against it. 

Many firms sell packaged insurance of the three and with the inevitably tiny payroll of a one man band (assuming your incorporated) the EL section is £40 or such. Depends if it's worth your effort to argue it with each and every agency or just pay £40 for a useless piece of paper that keeps them happy. 

Bod_1234

DullGreyGuy said:

Bod_1234 said:

DullGreyGuy said:

Bod_1234 said:
need to sort out liability insurance, 

You haven't said what you will be doing but many contractors require professional indemnity insurance which covers bad advice as well as Public/Employers Liability insurance which covers physical damage to people or property

The agency I am going through helpfully stipulate what types and limits I need:

Employers Liability (£5m)
Public liability (£2m)
Professional Indemnity Insurance (£1m)

Its your choice on the EL, many agency agreement state its required but if you are a sole trader or the sole director/employee of a company you own there is no legal requirement for it and there is no one that can make a claim against it. 

Many firms sell packaged insurance of the three and with the inevitably tiny payroll of a one man band (assuming your incorporated) the EL section is £40 or such. Depends if it's worth your effort to argue it with each and every agency or just pay £40 for a useless piece of paper that keeps them happy. 

Yeh, I'm starting to see the money making schemes, the agency has a handy "deal" with an insurer, and suddenly it's part of the required insurance.