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How do I set up as a contractor?(7 Posts)
Hi, I hope you can help. I have just had a discussion about a possible job opportunity, but would need to work as a contractor. There is a possibility I could work through a company that the organisation I would be working for use already or perhaps I should set up as a public ltd company? In your experience which would be best?
I also have to figure out how much I will charge but that is a whole different ball game.
I shall be working around 15 hours a week, but not really office based, so from home or in the company 's client office.
I would appreciate the help. I am just about to go out, but will be back later to see if I have any replies.
I can't believe it, was made redundant three years ago and have been a SAHM since then. It still might not happen but hopefully.
I used an umbrella company that was suggested by the agency because I can't be asked with tax returns etc for part time not very highly paid work.
If you are being paid enough, think you might take on further contract work in the future etc etc then it may worth going down the self employed route. HMRC word be the folk for that, although the company may well be able advise you.
Thank you. How does an umbrella company work?
I'm in a very similar position to you with regards to perhaps starting to contract in the future and found a website for an accountancy firm that was recommended by some of the guys on moneysavingexpert.com.
If you google S J D Accountancy, they have some really good guides on contracting and main differences between umbrella / ltd co. stuff, etc.
I'm not recommending using this firm as I have no personal experience of them but definitely found their website to be very useful.
Just a note of caution - an umbrella company might be the way to go especially if they deal with some of the complexities of operating as a limited company. But do check it all out. I was bounced into being a limited company by a similar arrangement 5 years ago and you need to be aware of the repercussions of the decision. It usually means you will need an accountant, to pay annual fees to them for preparing your accounts, you need a limited company bank account that is separate from your own, and you need the turnover to be able to justify it.
In theory you also need a PAYE scheme, although I've done with out that. If you are earning over £20,000 a year, the sums should work out but if you are earning much less than that then the accountancy fees etc may swallow up any savings made through paying corporation tax. I found that it was helpful in terms of looking professional getting work but in terms of that contract, it is purely for their administrative convenience - it's so that they can avoid IR35 (defining you as an employee - and if you are working long term as a contractor for a single company then you may fall foul of IR35 anyway). In all other respects, being a sole trader is much simpler (self assessment tax return with simple accounts that you or a bookkeeper can do). So caveat emptor and all that. I am no expert, but that's my experience.
Here's the link mentioned by the previous poster:
The rough guide is to charge double your salary plus the cost of any normal extras/expenses (pension, insurance, home office (printing, stationay etc), laptop, phone, internet, car, work travel (not the commute) etc) that can't be recalimed.
I set up as a ltd (FT, consultant), also you need a business account, yearly accountant (I do my own monthly returns which is easy enough) the first yr wss more expensive/stressful as I had to learn things and needed more help from the accountant but after that not to bad.
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