Well due to my recent job under-developments i'm looking at contracting for a while to get some decent income and help me get some more time to get my own business off the ground.

Now its been a while since i last contracted and even then i was paid directly by the agency.

Of all the position's I've applied for so far only 1 has said they still pay this way and the rest want you to be either LTD or thru an Umbrella?

Am i right in thinking that if i earn over £25k I'm better going LTD?
Also how does milage claim back work with this? Do i just keep an excel sheet as for the 1st 3 months or so 80miles a day is something i certainly need to be sorting out as its nearly £40 of extra money out of the pot

I've seen some places that offer the whole shebang of managing your LTD's finances but for fees of £110+ PCM...

Is this about the going rate or are there better ways to do it?

Thanks in advance for any advice you guys can offer as i know a few of you run your own business or are self employed  FFRR MY06 facelift With TDV8 Alloys Zeros/ATR's
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LTD is the way to go methinks ... Much lower Corporation Tax Rate too although it does add the hassle of having to balance books etc. African Bush Junkie ... in London!

Stats:
2006 TD6 Vogue SE
1972-2015 DeRanged Rover
2001 P38 dHSE (SOLD)

Cheers DRR.

Is it better to pay an accountant to do it monthly then like above or to try and DIY for a first timer? FFRR MY06 facelift With TDV8 Alloys Zeros/ATR's
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Get yourself a good accountant to sort out your taxes, VAT & Payroll etc. Go LTD. Make sure that any contract you have is outside IR35 otherwise there is little benefit to be had.

If you are LTD then anything you pay your accountant is tax deductible

As above. Limited is the way.

I pay a dedicated accountancy firm called CMEasy a fixed fee per week (about £20) who do all my invoicing, expenses and accounts.

I submit a weekly expense form for mileage, parking, meals, etc with photocopies of all receipts and my weekly balance sheet / statement of accounts includes those deductions. It's all pretty straightforward.

I also email them and my agent my approved weekly timesheet and then receive a weekly invoice for approval. All this is done electronically via text and email on my iPhone.

And I get paid weekly as opposed to a monthly salary.

Happy to email details of CMEasy if you want to peruse their services. I've had no issues with them other than an argument over childcare costs. But that was easily sorted. Si. <This is my name.

I eat rat poison.

A man ain't truly been insulted until he stands buck naked in front of a woman and she didn't even notice. Or care.

I was LTD for several years; in fact I only closed the company down last year. The tax advantages are good, but as above, watch out for IR35; you need to pick the right SIC code carefully - something like Management Consultancy (depending of course on what you are doing! I would never suggest that you should put that if you're doing PC Maintenance for example ).

A good accountant is the key. I would expect to pay maybe £100/month or equivalent for all aspects of running the company accounts, VAT and your presonal tax return, etc, but you should save that amount and then some. I can't recall exact amounts but IIRC when I was consulting, I was paying something like 19% of the overall income in tax in total - this included personal tax, corp tax, etc. You have to swing the way you take dividends, etc.

If you register for VAT, depends on what level of goods you're buying and selling (rather than services) but as a consultant, you can register on the Fixed Rate scheme. When I was VAT reg it was at the 17.5% rate, and basilcally you charge VAT out at 17.5% and pay the VAT man at 13%. It's very simple to administer, records are easy to keep, and you pocket an extra 4.5% for every invoice you issue. It's only if you want to do buy expensive items, or high levels of items, and claim the VAT back that the balance starts to swing.

Simon,

Could you FB me details of CMEasy?

Best,

Ram

Sure.  Si. <This is my name.

I eat rat poison.

A man ain't truly been insulted until he stands buck naked in front of a woman and she didn't even notice. Or care.

Cheers guys

Is there a list of what falls in and out of IR35 and these 'SIC Codes' as i wiki'd SIC and the stuff was all about american industry?

Cheers for the heads up Bellini If i go with them i'll put you as the referer and we can go halfers

I wonder if 'New Technology Consultancy' would fall out of IR35 or 'Digital Communication Consultantancy' then Cappo

The tax benefits of being LTD seem quite good to be fair as most jobs i can find for good contract wages are about 40miles away so that 400miles a week to claim back would be nice. If i have to pay an admin fee and surcharge to add business use to my policy could that be claimed back?
Also if my Home/Office is my base then am i entitled to claim lunchs and such like whilst working away so as to reduce the tax burden as well as things like Company Mobi, Laptop, Workwear with a logo on it maybe?? FFRR MY06 facelift With TDV8 Alloys Zeros/ATR's
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Will,

Have a look at this website; http://www.pcg.org.uk/cms/index.php, some of their info is members only, but there are some good general resources there.

If you need more information google 'IR35', that will give you plenty of reading material. IR35 basically talks about differentiating between people who have a Ltd company and genuinely provide a service (outside IR35) vs people who have a Ltd company and are basically acting as an employee, i.e. disguised employment (inside IR35). If you are outside IR35 you are entitled to take a smaller salary and earnings from share dividends, you pay some personal tax and NI but the bulk comes from annual corporation tax. If you are inside then you should deduct tax via PAYE (+ here the painful part is employers NI).

Organisations like PCG can be very helpful in drawing up your contract to have certain clauses and stipulations that place you outside of IR35. Obviously you define your independent status clearly with your client and provide the contracted services as per the agreed contract. Register for VAT as well as companies charge VAT, employees generally don't. I would not say that being VAT registered makes you outside IR35, but it helps differentiate you from someone who is inside IR35, or borderline.

Having an IR35 compliant contract etc does not mean that HMRC will not inspect your records, but the onus is with them to conclusively prove that you are inside, if that is what they suspect. If you look at the PCG website, you can see that IR35 legislation has been notoriously difficult for HMRC to successfully enforce and has failed to generate even a fraction of a % of the amount of revenue predicted.

There's many ways to run within a ltd company, I sometimes use my company car (all costs paid for directly by the company) ans sometimes I use my personal vehicle where the 45p a mile kicks in, I work away from home so there is rent to claim for along with overnight expenses for subsistence etc.
If you need specialist safety gear, ie boots safety glasses these can be claimed for, it's always best to pay directly out of the company account that way there is no doubt where the funds have gone
your accountant will advise what is a justifiable claim and what isn't
Pay your bills on time or early and it's a quiet life

Cheers all

I think from a quick read the biggest worry for me is the 6 monthly tax payments.

Do these often get taken straight out when the weekly/monthly invoices are paid to the company and kept to one side or is it something you have to do?

im guessing that it works like this,
Im the director of the company,
Other companies have a direct contract with MY company NOT me.
I work for the big company as a Rep/Employee of my own on a 'consulting' type basis.

Does that sound about right? FFRR MY06 facelift With TDV8 Alloys Zeros/ATR's
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your accountants establish your "deemed salary" at the start of the year, then you pay 4 quarterly NI payements.
for the VAT you supply the accountant with details of invoices sent and paid, then its a 1 minute job to file your quarterly VAT return on line, this is deducted from your bank account if you set it up that way.

you then pay your corporation tax after the company year has finished.

Will, you've just about got it.

Another aspect is shareholders. My wife is my company secretary and she gets paid by my company.

Although she works full time elsewhere, her earnings are below a particular tax threshold, so my company pays her up to that threshold. It helps me and it helps her.

My biggest worry is tax, but only because I have a horrible tax code from my time working in Australia. I'm hoping that evens itself out.

I think as Cleughy said, pay your bills on time and keep records. Your accountant should assist with this anyway.

By the way. CMEasy. You mention me and we both get paid a little something. That's their way.

Details below:-

http://www.cmeasy.co.uk/Home/ Si. <This is my name.

I eat rat poison.

A man ain't truly been insulted until he stands buck naked in front of a woman and she didn't even notice. Or care.

Cheers Bellini

I think the tax, vat, and ni payments scared me a but as they are large chunks in one go but I guess I would just ring fence these in another pot as I go along

Having the mrs as a secretary.... Don't think she'll like that idea

Tbh I can't see me having an annual turnover of more than £35k pa for a year or two so that bit wouldn't worry me too mug straight away but is a good thing to keep in mind.

I guess the main crux I see that keeps coming up is claiming as much as you can to reduce the taxable amount without taking the pee pee too much, so things like milage, meals, refreshments, equipment.. Would be the first things.

Can you get business car insurance policies that then have SDP added on and claim that back as well or would the car then have to be a company asset? FFRR MY06 facelift With TDV8 Alloys Zeros/ATR's
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