Limited Company

monkey-fingers

MyRealNameToo said:

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)

Absolutely. I'm an IT Consultant, so my insurance is £200 a year and includes IR35 insurance.
The OP didn't say what it was they did. Consultations could be anything.

And you're absolutely right if we're only talking about £20k a year - the numbers are going to be very different, hence why I picked a day rate. Although Umbrella companies tend to charge a monthly fee which isn't based on income. And it's generally about the same as the £100 a month my Accountant charges.

Because I've just swapped over and have already paid a chunk of income tax and have no allowance left, my NI is going to be virtually 0 either way, because I'm not taking a wage, only Dividends. The OP could well be in a similar situation.

Albert0500

Thanks all, I have a call booked with local recommended accountant.

Think I'll go down that route

Albert0500

monkey-fingers said:

MyRealNameToo said:

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)

Absolutely. I'm an IT Consultant, so my insurance is £200 a year and includes IR35 insurance.
The OP didn't say what it was they did. Consultations could be anything.

And you're absolutely right if we're only talking about £20k a year - the numbers are going to be very different, hence why I picked a day rate. Although Umbrella companies tend to charge a monthly fee which isn't based on income. And it's generally about the same as the £100 a month my Accountant charges.

Because I've just swapped over and have already paid a chunk of income tax and have no allowance left, my NI is going to be virtually 0 either way, because I'm not taking a wage, only Dividends. The OP could well be in a similar situation.

Hi, i'm a child psychologist, I have a full time position elsewhere under PAYE

redped

If you're already working full-time elsewhere, do you need the income from the Ltd. company to live off right now?  If not, then you could make an employer's pension contribution of the £20K straight into a SIPP, meaning your Ltd. won't have to pay any NI contributions or any corporation tax.  It depends if your SIPP provider will accept employer's contributions, but I know that HL definitely does.

Albert0500

redped said:

If you're already working full-time elsewhere, do you need the income from the Ltd. company to live off right now?  If not, then you could make an employer's pension contribution of the £20K straight into a SIPP, meaning your Ltd. won't have to pay any NI contributions or any corporation tax.  It depends if your SIPP provider will accept employer's contributions, but I know that HL definitely does.

redped said:

If you're already working full-time elsewhere, do you need the income from the Ltd. company to live off right now?  If not, then you could make an employer's pension contribution of the £20K straight into a SIPP, meaning your Ltd. won't have to pay any NI contributions or any corporation tax.  It depends if your SIPP provider will accept employer's contributions, but I know that HL definitely does.

Thank you, sounds like a brilliant idea and I need to give it some serious consideration !

Marcon

Albert0500 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.

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 

Does your current employer know you're doing this? Check what your contract says about taking on other paid work - once you set up a limited company your name will be publicly visible at Companies House.

MyRealNameToo

monkey-fingers said:

MyRealNameToo said:

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)

Absolutely. I'm an IT Consultant, so my insurance is £200 a year and includes IR35 insurance.
The OP didn't say what it was they did. Consultations could be anything.

And you're absolutely right if we're only talking about £20k a year - the numbers are going to be very different, hence why I picked a day rate. Although Umbrella companies tend to charge a monthly fee which isn't based on income. And it's generally about the same as the £100 a month my Accountant charges.

Because I've just swapped over and have already paid a chunk of income tax and have no allowance left, my NI is going to be virtually 0 either way, because I'm not taking a wage, only Dividends. The OP could well be in a similar situation.

I've had the misfortune of having used two umbrellas, both charged £75/month but that included by insurance (though having read the policy book they weren't actually covered for what I was doing) so notably lower than your £1,400 a year and very much lower than my £5,000 a year 

I had two because one bought out the other, was a funny conversation with the owner when they badly screwed up my pay. He offered a personal advance of salaries because it would take them a few days to sort things out. He then exclaimed at my pay rate, I acknowledged its a bit higher than most but by no means an outlier, he then asked to confirm I was a bricky. I said no, I'm doing a £4bn reinsurance deal. He said that the company he'd bought had said everyone was trades people and I was noted as a bricky, pointed out that the last company had never asked what I do. This is how we discovered his company was exposed as his insurance excluded financial services. 

Albert0500

Marcon said:

Albert0500 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.

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 

Does your current employer know you're doing this? Check what your contract says about taking on other paid work - once you set up a limited company your name will be publicly visible at Companies House.

Yes they do, I had to get written permission.

silvercar

I have my own Ltd company and pay myself through paye using the hmrc basic paye tool. It’s very easy to set up and use. You could write your own invoices using word and monitor the company accounts using excel. 

https://www.gov.uk/basic-paye-tools

the tool generates payslips and P60 forms as well as calculating any tax due and provides a link to pay the tax directly.

Grumpy_chap

MyRealNameToo said:

I've had the misfortune of having used two umbrellas, both charged £75/month but that included by insurance 

To be fair, for the liabilities that UCs take on plus the cash flow profile the businesses operate under, their fees are far far too low and it is difficult to see how any of the UCs actually manage to stay afloat.