Starting Off Contracting.

Grumpy_chap

Aaaah, ok.

I was using GROSS as in the invoice revenue, which is plus VAT.
It is the gross income to the business before deduction of expenses and then various taxes associated with running the business and corporation tax on residual profit.

I can see your use of the phrase gross to include VAT as also being valid.

Either way, £1k or £800 is still above typical day rates for most.

DullGreyGuy

Grumpy_chap said:

I can see your use of the phrase gross to include VAT as also being valid.

Ahh yes, in Lloyds insurance you get a lot of fun with "gross" and "net" @Grumpy_Chap with "Gross Gross" premiums, "Gross" premiums, "Gross Net" premiums, "Net" premiums.... I'm just waiting for someone to introduce "net net" as a concept!

Bod_1234

Thanks, revisiting this after a month or so of contracting.

Here are my initial experiences.

Limited company was trivial to set up. Got a good deal on the 3 mandatory insurances, £200 a year. Lots of competition and big swing on premiums so shop around. I ended up with Kingsbridge.

For business bank account, I ended up with NatWest Mettle, you won't earn any interest on money, however it's got a reasonably decent app to keep track of receipts and includes a free subscription to Freeagent, which is really good online book keeping, and it handles your PAYE for yourself and other bookkeeping functionality.    My accountant said it will simplify end of year accounts and reduce his charges.

As I have already been earning in a previous employment this year, and well into the next tax bracket, I have decided to not pay myself for a few months and let my company earnings built up.  I'm likely going to just put this into pension tax free, as I'm only a few years away from being able to take early pension.

If someone is reading this and starting out, I would tell them to make sure they have a decent amount of accessable funds during the startup months.

I've been contracting for 6 weeks and only just started getting payments coming in...

In Mettle I can setup an automated pot to prepare for paying corporation tax.  I set it to stash away 20% of what's coming in.  I might need to adjust this value, but seems like a good starting point.

First year tax deductible stuff can include things IT hardware purchases, back dated prior to starting company.  I bought a new PC a few months back and some NAS storage, so make sure you add them as startup hardware purchases to get tax deduction on these.

Working from home, I can personal charge my company for a portion of heating, electric, internet etc.  That's something I still need to sort out end of year with my accountant.

Lots of other forms and paperwork to sort out, e.g. telling pensions regulator that nobody is eligible for pension enrollment.

It's certainly been a learning experience.  I think I'm getting there.

DullGreyGuy

Bod_1234 said:
Got a good deal on the 3 mandatory insurances, £200 a year. Lots of competition and big swing on premiums so shop around. I ended up with Kingsbridge.

Contractors PI/EL/PL is 90% based on the PI element, the other two lines have no material exposure and are sold for peanuts. 

Assuming you actually want cover and not to just tick a box, certainly read your PI documents thoroughly and make sure you understand them! There are some really low quality policies out there designed for those that buy on price alone and more than one broker has proposed a policy that excludes any work done in Financial Services (which 100% of my work is done in)

Remember PI is written on a claims made basis not a date of loss, as such this year should be dirt cheap because even if you bodged up at some point in the year the chances of the client identifying it, preparing the evidence and submitting a claim against you this year is tiny. Next year when you buy your PI you need to ensure it has a retroactive date of when you first started trading, this will push your premiums up but otherwise a claim for something that happens today that gets presented in 12 months time wouldnt be covered by your lapsed policy, the claim didn't happen in the policy year and the new policy without a retroactive date only covers claims presented from an event that occurred in the year.