Limited Company

Albert0500

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

MattMattMattUK

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

That depends how competent you are with accounts and general admin. You could set up the company yourself in fifteen minutes or less, you could do that level of accounting using an online platform such as Xero and it would take a few minutes per invoice and you can do your VAT and corporation tax returns through that. How comfortable you are with all that is up to you.

Albert0500

MattMattMattUK said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

That depends how competent you are with accounts and general admin. You could set up the company yourself in fifteen minutes or less, you could do that level of accounting using an online platform such as Xero and it would take a few minutes per invoice and you can do your VAT and corporation tax returns through that. How comfortable you are with all that is up to you.

Thank you, I'm generally competent but lack knowledge so need to go through a steep learning curve.

Will Xero help with filling required annual accounts?

MyRealNameToo

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

Why do you need to setup a LTD? 

Even if they won't take you as self employed there should be the option of using an umbrella. 

Its possible to operate a LTD without the assistance of an accountant but the returns etc are not as dumbed down as the self assessment forms and enough people struggle with those let alone knowing when you need to do your confirmation statement or the relation between the company accounts filing and corporation tax etc. 

I've always used an accountant for our company, similarly consultancy based, and they have saved me much more than their fees plus deal with issues easily when I've messed up (eg paid VAT to PAYE) whereas would have taken me a long time to get through to HMRC etc. Our billable amounts are substantially more though as it's a full time job. 

monkey-fingers

As an aside, I wouldn't touch Xero.
Try and find an option that uses Freeagent. If you open a Mettle account, you get it free. It does everything for you, including end-of-year, dividend certificates and even suggest how much tax you owe (which helps you budget).

Freeagent talks directly to your bank account, so when you add/remove money, it'll prompt you to categorise it so that it works out how much tax is owed. If, like me, you get to VAT thresholds, then it'll sort your VAT out for you too.

HMRC are forcing everyone from April to use one of these software packages. Both Xero and Freeagent are compatible.

All contractors I work with are using Freeagent, because Xero doesn't work with Mettle or Tide (who I use - my accountant provides Freeagent as part of their services)

Obviously, if you're setting a new account (and where relevant, a SIPP for your pension) please don't forget to use Quidco or TopCashBack (obviously, we're money saving here) - I forgot and have missed out on a couple of hundred quid.

EDIT to add, as @MyRealNameToo rightly pointed out, a decent accountant will save you way more than you pay them. I have no problem paying tax - and I pay a LOT of tax. But I don't see why I should pay more than I have to - after all, if you were PAYE, you wouldn't offer to pay extra tax.

Grumpy_chap

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

For that number of transactions, you can probably set up a simple record keeping system using Excel or similar.  That means you will know exactly what maths is behind the visible data rather than trusting a "blind" system such as XERO, Freeagent or such like.

You will need a business bank account for the Ltd Co.

It is probably worth getting an Accountant (use a local firm by recommendation) to support the first year.  If you then feel confident to do everything yourself, you can always change in the future.  

monkey-fingers

Grumpy_chap said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

For that number of transactions, you can probably set up a simple record keeping system using Excel or similar.  That means you will know exactly what maths is behind the visible data rather than trusting a "blind" system such as XERO, Freeagent or such like.

You will need a business bank account for the Ltd Co.

It is probably worth getting an Accountant (use a local firm by recommendation) to support the first year.  If you then feel confident to do everything yourself, you can always change in the future.  

From April, all returns need to be done electronically, so you're going to need one of these systems.

Albert0500

MyRealNameToo said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

Why do you need to setup a LTD? 

Even if they won't take you as self employed there should be the option of using an umbrella. 

Its possible to operate a LTD without the assistance of an accountant but the returns etc are not as dumbed down as the self assessment forms and enough people struggle with those let alone knowing when you need to do your confirmation statement or the relation between the company accounts filing and corporation tax etc. 

I've always used an accountant for our company, similarly consultancy based, and they have saved me much more than their fees plus deal with issues easily when I've messed up (eg paid VAT to PAYE) whereas would have taken me a long time to get through to HMRC etc. Our billable amounts are substantially more though as it's a full time job. 

Thank you, Umbrella company maybe a good option, it's a local authority and I've been told we must invoice via a limited company.

Albert0500

Albert0500 said:

MyRealNameToo said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

Why do you need to setup a LTD? 

Even if they won't take you as self employed there should be the option of using an umbrella. 

Its possible to operate a LTD without the assistance of an accountant but the returns etc are not as dumbed down as the self assessment forms and enough people struggle with those let alone knowing when you need to do your confirmation statement or the relation between the company accounts filing and corporation tax etc. 

I've always used an accountant for our company, similarly consultancy based, and they have saved me much more than their fees plus deal with issues easily when I've messed up (eg paid VAT to PAYE) whereas would have taken me a long time to get through to HMRC etc. Our billable amounts are substantially more though as it's a full time job. 

Thank you, Umbrella company maybe a good option, it's a local authority and I've been told we must invoice via a limited company.

Just been informed the agency will only deal via a
Limited Company, just one other thing to note, not sure if it's relevant or not, but this is a side hustle and I'm employed elsewhere full time on PAYE 

monkey-fingers

Albert0500 said:

MyRealNameToo said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

Why do you need to setup a LTD? 

Even if they won't take you as self employed there should be the option of using an umbrella. 

Its possible to operate a LTD without the assistance of an accountant but the returns etc are not as dumbed down as the self assessment forms and enough people struggle with those let alone knowing when you need to do your confirmation statement or the relation between the company accounts filing and corporation tax etc. 

I've always used an accountant for our company, similarly consultancy based, and they have saved me much more than their fees plus deal with issues easily when I've messed up (eg paid VAT to PAYE) whereas would have taken me a long time to get through to HMRC etc. Our billable amounts are substantially more though as it's a full time job. 

Thank you, Umbrella company maybe a good option, it's a local authority and I've been told we must invoice via a limited company.

Problem with an umbrella is that you'll end up paying employers NI as well as the fee to the company to do it. You'll also have to pay for holiday (which you then get back) and have to pay full income tax, which if you have other income, will put you in a high bracket with the other issues that entails.

Here's the calculator for inside IR35 (i.e. Umbrella)
https://www.contractorcalculator.co.uk/insideir35contractorcalculator.aspx

Here's the calculator for outside IR35 (which is what you're being offered)
https://www.contractorcalculator.co.uk/outsideir35contractorcalculator.aspx

As an example, if your rate is £500 a day, the difference will be £10k a year or more (depending on your Umbrella fees)

MyRealNameToo

monkey-fingers said:

Albert0500 said:

MyRealNameToo said:

Albert0500 said:

I will be doing some private consultations via a local authority and believe I need to set up and bill via a limited company.

My question is how easy is it to do, I will only be issuing 6/7 invoices a year totalling around 20k per year is ongoing management straight forward or should I look at using a local accountant?

thank you

Why do you need to setup a LTD? 

Even if they won't take you as self employed there should be the option of using an umbrella. 

Its possible to operate a LTD without the assistance of an accountant but the returns etc are not as dumbed down as the self assessment forms and enough people struggle with those let alone knowing when you need to do your confirmation statement or the relation between the company accounts filing and corporation tax etc. 

I've always used an accountant for our company, similarly consultancy based, and they have saved me much more than their fees plus deal with issues easily when I've messed up (eg paid VAT to PAYE) whereas would have taken me a long time to get through to HMRC etc. Our billable amounts are substantially more though as it's a full time job. 

Thank you, Umbrella company maybe a good option, it's a local authority and I've been told we must invoice via a limited company.

Problem with an umbrella is that you'll end up paying employers NI as well as the fee to the company to do it. You'll also have to pay for holiday (which you then get back) and have to pay full income tax, which if you have other income, will put you in a high bracket with the other issues that entails.

Here's the calculator for inside IR35 (i.e. Umbrella)
https://www.contractorcalculator.co.uk/insideir35contractorcalculator.aspx

Here's the calculator for outside IR35 (which is what you're being offered)
https://www.contractorcalculator.co.uk/outsideir35contractorcalculator.aspx

As an example, if your rate is £500 a day, the difference will be £10k a year or more (depending on your Umbrella fees)

Better to say what the difference is on £20k of earnings per year rather than what it would be on £500/day


As a LTD you too will have to pay employers NI (in principle) though can mitigate in part with a lower salary. However you will also have to pay for PI insurance which can be pricy depending on what you do, the accountants fees, potentially IR35 insurance (seems to be getting more common)

Thankfully I get mates rates but the next best PI insurance quote for me than the one I buy is £4k, on a £20k earnings thats a big slug (appreciate many more pay less than me but the joys of what I do)