to not want to become a freelancer?

[AnneWentworth]

I am a contracter at present, the job is a temp/perm position.

The company is established in the US and don't as yet have everything set up here. I have been working here for about 5 months and am very happy and they want me to become permanent (I work directly for the Chairman).

I have a call to discuss arrangements later today but the FD has asked if I would be adverse to setting up as a freelancer. I have some reservations:

• I will have to do my own taxes and NI which will take up my time (I have a lot of outside work commitments).

• I presumably won't get all the benefits that being permanent brings like sick pay, holiday pay etc (before things like bonus etc).

• Lack of job security?!

The only plus I can see is that I could at a later date chose to be more flexible in my working practice and could use my freelance business to my advantage - but I have no immediate plans for this.

If I have to do my own tax etc then is it unreasonable to ask for more money? I am not even sure if the two are connected but if I am employed I won't have to incur this admin issue.

PrimaLass I think that one sentence is probably sufficient for me to insist on being employed.

If you are 'freelance' but work full time for one employer in a tax year then not only could you get into trouble but they certainly could get into very expensive trouble themselves.

You could end up being shafted from both ends if you do this.

You have none of the security of being a permie, but none of the true independence and flexibility of a freelancer. I also think that you will have trouble persuading HMRC that you are not a 'disguised employee'. You need to read up about IR35. You need to consider that you would need your own insurance - public liability etc.

You would need an accountant to do your company accounts, it is not just as simple as submitting a SA tax return. This costs £1000+ a year even for a very basic service.

If you are sending him anything in relation to salary then you need to uplift a lot - and express your rate as a daily amount because remember that you won't be getting holiday and you don't want there to be an expectation that you will work a certain number of days.

In relation to expenses, your company that you set up would need to cover your expenses and claim them back +VAT from the company you are doing the work for - so think about how you could cover flights/hotel for a US trip. You would no longer get a credit card from the company you are working for.

Basically they are trying to get you on the cheap, so stick your rate up and make them realise that it isn't the cheap option at all.

You can freelance for only one company but you would need to do it as a self employed person and pay income tax and NI on your invoiced earnings less expenses. The IR35 issue and only working for one company is if you operate through a limited company.

Self employed tax returns are really rather straightforward as long as you log all income and expenses on a weekly/monthly basis.

For Freelance I would recommend I would go with your salary expectation and divide by 35*52. Then multiply by c.1.5 to cover bank hols/hols/payments in lieu of car/pension benefits. In an industry with big bonuses I would say double it to get your hourly rate.

I think it would be hard to prove to the IR that you were a true freelancer if you were working full time as a PA Service. 'Can someone tell them at any time what to do, where to carry out the work or when and how to do it?' and 'can someone else move you from task to task' are two of the q's which determine employment and having been a PA...

Really cheeky of him to ask what you make after agents fee. As a long term freelancer who now has a perm job, perm job works for me. why are you dealing with salary negotiations, if you are using an agent they should be doing it.

Yes, I agree it could be problematic for the employer re employers NI, but not impossible (depending on how the PA work is set up). She mentioned a US company parent so I did think she might work from home and be rather less 'directed' and fixed hours. We use freelance PA's at our office and they are certainly self employed.

It annoys me when people talk about IR35 applying to ALL freelancers though - it doesn't (not that you were!)

I found the taxes taxing and stressful when I was freelancing, along with the invoices, time sheets etc. what a hassle.

I wasn't I'm a freelance and it doesn't apply to me. But I am definitely a freelance-freelance. Loads of clients, can work for who I want when I want and can sub-contract at will.

Definitely get advice from an accountant OP and perhaps google IR35 as well. The Inland Revenue don't take kindly to employees being disguised as self-employed.

DH is a contractor and set-up a limited company. What I say below is based on personal experience and I am not legally qualified in this area.

1. In my personal experience, you accurately list the negatives.

1. Don't under-estimate the amount of tax/income related paperwork: even if you employ a management company they can and do make mistakes which are time-consuming to sort out time you are not paid for and you are still legally responsible for things like the tax return.

1. DH has to pay tax four times a year as a limited company: corporation tax, personal tax, NI and something I've forgotten. All a nuisance and necessary to get right. This also means cash flow is more irregular than a wage. As a limited company, I believe you are paid a minimum wage and then take dividends from the company.

1. Take legal advice, as HMRC have been tightening up on various definitions, especially if it looks like a staff contract under another name. Being a limited company seems to work best for those who genuinely work a contract for a set period of time on a project, like an IT contractor or an engineer, and who then move to another company for another contract.

1. Shouldn't your agency be dealing with this for you as you pay them? Your Boss may not be trying to pull a fast one; the law may be different in the US, but you would need adice as to this.

I looked into setting myself up as a company when I was doing some free lance work. My situation was slightly different to yours, but close enough.

Neither the ltd or umbrella company route was worth it. Those are if you are earning a high salary (from what I can remember it would have to be well into the upper tax bracket so definitely over £40k per annum). Otherwise you are self employed. SE also means you can only work for one company in a year.

You are also correct about the finders fee for the agency. have also been in that situation, the company had to pay it even thought they took me on on a fixed term contract. I even ended up working for the same company at a later date through the original agency ...

basically, if they are happy with your work and want to keep employing you, they should take you on as an employee. Taking you on as freelance is not to your advantage, I would avoid at all costs unless you intend to go fully free lance and work for multiple employers.

Well we had a discussion where I expressed my doubts and they are happy to honour holidays, sick pay etc to a level I would be happy with. Salary also ok but I think I would need more to consider freelance. He suggested staying part time so that I could work for other clients. He suggested a 6 month contract whereby 2 months notice would be necessary for them to renew or terminate. I argued for a year and he said that they could do that but if business needs changed and they had to terminate then they would pay me three months salary.

I asked for him to put it all in writing and I will consider it and seek advice and come back to him.

Also my company card/laptop etc remains.

Scrummummy does this read as you meant, or is there a comma missing after month? Genuine Q as I would be interested in finding out more about such companies

"...it'll cost you about £50 a month cheaper than your own company and no accountants to deal with"

Interesting. My exH is a freelancer. He works through an agent for a government dept as a software developer. He is bitten by IR35 and simply gets an hourly rate. He has to charge VAT as well.

He has done this for over 10 years, always for the same government dept at the same location. So long as he abides by IR35, (which roughly means 95% of profit after pension contributions must be taken as salary, paying tax, employee and employer NI, rather than dividends with less deductions) working for one client is fine. He has a Ltd company, an accountant, an agent, loads of insurances, such as sick pay etc. An umbrella company might be less hassle!

Oops, crossed with you.

Well I have agreed to consider it and seek advice so I will think about it. I had a look around to see if there are jobs put here that I could take on alongside.

My previous boss often asks if I can help him with projects etc so I could have a ready made client right there to make up the difference.

If you do decide to go for it there is a freelance board on here, it doesn't get tonnes of traffic but has very good posters including some very helpful accountants, and of course there are old threads to search on timesheets, tax, etc.

Since when does a freelancer get offered to earn LESS than their proper level on a permanent footing?

He should be paying you MUCH more!

Contact some high level recruiters and find out a day rate for top level PAs and then see where that gets you in terms of money.

That's where you START looking at.

You could offer your boss reduced rates for any additional projects.

In short, you should be raking it in, to compensate for reduced benefits, and no redundancy entitlement.

Would you be planning to have any children at any point? A freelancer gets no maternity package iirc.

No, I have three DC and won't be having anymore. I am giving it due consideration as in the longer term it could give me greater flexibility to pursue other things that a standard 9-5 wouldn't give me.

nessus - yes there should be a , between month and cheaper. I use parasol and they are great.

Thanks for the parasol tip. Off to do some finger research!