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Any Contractors Here?
- Thread starter GazC
- Start date
roaminblue
Well-Known Member
- Joined
- 27 Apr 2008
- Messages
- 2,991
I'm not a contractor, but my old firm hired a lot and I got stuck with a lot of the admin.
So, we warned our contractors away from umbrella company because of new regs that came into play last year. I'm not sure if they replaced ir35 or simply superseded them, but we became very cautious about them. I can't remember their name as I stopped working there last august. But effectively, our lawyers felt LTd company was a safer route. Effectively contractors had to prove they are not being employed full time by the company under the auspices of temp. It's to stop call centers hiring lots of temps and keeping them employed for years without benefit. We felt Ltd company could offer more protection than umbrella.
In terms of umbrella companies, they do similar things, only you don't have to do any of the accounting yourself. So they are quite hassle free. You simply submit timesheets and you can get paid. You do of course pay a fee.
From what I understand, ltd companies allow for a few more benefits. You can write more expenses of as tax (I understand more than you can in an umbrella company) you can pay yourself a salary out of it, you can even name family members over the age of 18 as employees/beneficiaries. You will have to be thorough in your taxes and accounts. Although you could still hire an accountant.
There are companies that help set up ltd companies for contractors, and I think even, if you request it do your accounting.
So, we warned our contractors away from umbrella company because of new regs that came into play last year. I'm not sure if they replaced ir35 or simply superseded them, but we became very cautious about them. I can't remember their name as I stopped working there last august. But effectively, our lawyers felt LTd company was a safer route. Effectively contractors had to prove they are not being employed full time by the company under the auspices of temp. It's to stop call centers hiring lots of temps and keeping them employed for years without benefit. We felt Ltd company could offer more protection than umbrella.
In terms of umbrella companies, they do similar things, only you don't have to do any of the accounting yourself. So they are quite hassle free. You simply submit timesheets and you can get paid. You do of course pay a fee.
From what I understand, ltd companies allow for a few more benefits. You can write more expenses of as tax (I understand more than you can in an umbrella company) you can pay yourself a salary out of it, you can even name family members over the age of 18 as employees/beneficiaries. You will have to be thorough in your taxes and accounts. Although you could still hire an accountant.
There are companies that help set up ltd companies for contractors, and I think even, if you request it do your accounting.
Mental_blue
Well-Known Member
- Joined
- 7 May 2009
- Messages
- 1,984
It's down to a question of costs versus hassle.
The Umbrella company aren't doing it for their own benefit, they do it to make money so they charge a fixed fee which will cover all the Tax (PAYE, Corp and VAT) and NI and still leave a cut for them.
If you have your own company then you need an accountact to do this for you but you need to provide all the figures and details of expenses etc. and you will need to check annual accounts etc.
Also depends how long you plan on contracting for. If you see it as a long term venture then probably setting up a company - although it easier to buy one of the shelf - is going to be better. If you think it is only going to be short trem then go through the Umbrella company.
I have my own company and probably spend a couple of hours at the end of each quarter getting the stuff together to send to my accountant and half a day at the end of each year checking the annual accounts match my records.
Other than that 5 minutes a month online paying my PAYE and NI and another 10 minutes a quarter online doing my VAT returns according to the figures provided by the accountant.
So all in all no big hassle.
The Umbrella company aren't doing it for their own benefit, they do it to make money so they charge a fixed fee which will cover all the Tax (PAYE, Corp and VAT) and NI and still leave a cut for them.
If you have your own company then you need an accountact to do this for you but you need to provide all the figures and details of expenses etc. and you will need to check annual accounts etc.
Also depends how long you plan on contracting for. If you see it as a long term venture then probably setting up a company - although it easier to buy one of the shelf - is going to be better. If you think it is only going to be short trem then go through the Umbrella company.
I have my own company and probably spend a couple of hours at the end of each quarter getting the stuff together to send to my accountant and half a day at the end of each year checking the annual accounts match my records.
Other than that 5 minutes a month online paying my PAYE and NI and another 10 minutes a quarter online doing my VAT returns according to the figures provided by the accountant.
So all in all no big hassle.
roaminblue said:I'm not a contractor, but my old firm hired a lot and I got stuck with a lot of the admin.
So, we warned our contractors away from umbrella company because of new regs that came into play last year. I'm not sure if they replaced ir35 or simply superseded them, but we became very cautious about them. I can't remember their name as I stopped working there last august. But effectively, our lawyers felt LTd company was a safer route. Effectively contractors had to prove they are not being employed full time by the company under the auspices of temp. It's to stop call centers hiring lots of temps and keeping them employed for years without benefit. We felt Ltd company could offer more protection than umbrella.
In terms of umbrella companies, they do similar things, only you don't have to do any of the accounting yourself. So they are quite hassle free. You simply submit timesheets and you can get paid. You do of course pay a fee.
From what I understand, ltd companies allow for a few more benefits. You can write more expenses of as tax (I understand more than you can in an umbrella company) you can pay yourself a salary out of it, you can even name family members over the age of 18 as employees/beneficiaries. You will have to be thorough in your taxes and accounts. Although you could still hire an accountant.
There are companies that help set up ltd companies for contractors, and I think even, if you request it do your accounting.
That's a great help, cheers.
Prestwich_Blue
Well-Known Member
The benefit of umbrella companies is that you have no hassles and might get a standard allowance for expenses but to all intents and purposes you're an employee and nothing more so you pay Income Tax & Employees NI on your full income.
With Limited Companies you need to track and record everything but there are significant tax advantages as you can pay yourself and family members a salary (but you have to be able to justify it) plus you and any other shareholder can take a dividend, which doesn't attract as much tax as salary. You can also claim work-related expenses like mileage and accommodation.
With Limited Companies you need to track and record everything but there are significant tax advantages as you can pay yourself and family members a salary (but you have to be able to justify it) plus you and any other shareholder can take a dividend, which doesn't attract as much tax as salary. You can also claim work-related expenses like mileage and accommodation.
roaminblue
Well-Known Member
- Joined
- 27 Apr 2008
- Messages
- 2,991
GazC said:roaminblue said:I'm not a contractor, but my old firm hired a lot and I got stuck with a lot of the admin.
So, we warned our contractors away from umbrella company because of new regs that came into play last year. I'm not sure if they replaced ir35 or simply superseded them, but we became very cautious about them. I can't remember their name as I stopped working there last august. But effectively, our lawyers felt LTd company was a safer route. Effectively contractors had to prove they are not being employed full time by the company under the auspices of temp. It's to stop call centers hiring lots of temps and keeping them employed for years without benefit. We felt Ltd company could offer more protection than umbrella.
In terms of umbrella companies, they do similar things, only you don't have to do any of the accounting yourself. So they are quite hassle free. You simply submit timesheets and you can get paid. You do of course pay a fee.
From what I understand, ltd companies allow for a few more benefits. You can write more expenses of as tax (I understand more than you can in an umbrella company) you can pay yourself a salary out of it, you can even name family members over the age of 18 as employees/beneficiaries. You will have to be thorough in your taxes and accounts. Although you could still hire an accountant.
There are companies that help set up ltd companies for contractors, and I think even, if you request it do your accounting.
That's a great help, cheers.
No probs, as the others have mentioned, umbrella you are technically an employee which may become problematic with regs.
As I said, look into ltd company providers if you don't want to do your own accounting, I can pm you a name of a company we used if you want. Failing that, hire your own accountant. Which ever is cost effective
scousemanc
Well-Known Member
I have my own limited company. Im an accountant so keeping the books, running the payroll (me only), doing the VAT return and preparing the accounts are a doddle. However, I know a few contractors who employ an accountant to do all this and it's not too expensive and is worth it to remove the hassle. Although as others have said you need to keep on top of the paperwork.
The big tax advantage with your own limited company is that you can pay profits out in dividends rather than salary. Dividends do not attract NI, so are a masive advantage. I pay a modest monthly salary and top up with dividends, when I need the cash. I prefer to mix it like this as I don't want HMRC to think I'm taking the piss by paying it all in dividend. Plus, you want to maintain your NI history.
The big tax advantage with your own limited company is that you can pay profits out in dividends rather than salary. Dividends do not attract NI, so are a masive advantage. I pay a modest monthly salary and top up with dividends, when I need the cash. I prefer to mix it like this as I don't want HMRC to think I'm taking the piss by paying it all in dividend. Plus, you want to maintain your NI history.
Mental_blue said:It's down to a question of costs versus hassle.
The Umbrella company aren't doing it for their own benefit, they do it to make money so they charge a fixed fee which will cover all the Tax (PAYE, Corp and VAT) and NI and still leave a cut for them.
If you have your own company then you need an accountact to do this for you but you need to provide all the figures and details of expenses etc. and you will need to check annual accounts etc.
Also depends how long you plan on contracting for. If you see it as a long term venture then probably setting up a company - although it easier to buy one of the shelf - is going to be better. If you think it is only going to be short trem then go through the Umbrella company.
I have my own company and probably spend a couple of hours at the end of each quarter getting the stuff together to send to my accountant and half a day at the end of each year checking the annual accounts match my records.
Other than that 5 minutes a month online paying my PAYE and NI and another 10 minutes a quarter online doing my VAT returns according to the figures provided by the accountant.
So all in all no big hassle.
It's a 24 month assignment, so as I understand I won't be able to claim for many expenses due to IR35 if I went through an umbrella company, do you know if this would be true if I formed my own limited company? I'm happy doing payroll myself, the PL & EL insurance would be less than £60 a year and local accountants are quoting between £300-£600 for doing annual accounts, a number of banks are offering no charge business accounts for 24 months, the contract isn't enough to draw me into complying with VAT registration and it costs £15 to go theough the company formation with companies house. Am I missing something obvious? It seems strange that umbrella companies are quoting between £20-£30 a week, that's a mark up of over a thousand pound for a rudimentary service annually. It seems so straightforward in fact that I'm concerned I'm really overlooking something.
Been contracting for 15 years. Have my own ltd company. Use an accountant who charges about £1000/year, be careful though when finding an accountant that its one who deals with contractors and ask him how much % you should keep (should be over 80%). You pay yourself a low salary £8-9K. Pay low NI + income tax. Employ a close family member as a secretary pay them £5K ( you don't really - better if they dont work or are retired). Depending on your contract/role put as much down in your books as expenses (computers, phones, broadband, etc). Also mileage on your car (to and from work). 45p (first 10K) then 25p after (iirc). What's left after salary,expenses etc you need to pay corporation tax on at 21% ( think you get a reduction in your first year). Also recommend going on flat rate VAT scheme, you charge 20% as normal but only pay a percentage of this back (makes you about £100 a month) and you don't need to mess around with receipts for VAT. If you get a good accountant he'll let you know all this. If you need to know anything else PM me. Cheers