self-employed v employee

[teuch]

I am currently on a temporary contract until xmas but my employer has asked how I would feel about somehow doing work for them in the future, after the baby arrives and I have had time to settle into my new island home.

I was considering setting up freelance anyway (or consultant or something...not sure about terminology just yet!) as I would like to have other 'clients' also.

So...any suggestions on what approach would be best with my current employer? It would only be part-time, perhaps 1-2days per week year-round and possible more for specific projects.

Teuch - I'm a Contractor and I'm also registered as a Limited Company through a firm called Brooksons. I'll get you a link. It saves you a FORTUNE in tax!

Hi teuch. I'd definitely go for doing it on a self-employed basis, as it will give you much more flexibility to work for multiple clients at the same time. Whilst you could do this as an employee for them and freelance for others, the likelihood is that your tax would get messed up somewhere along the way, and you'd have to do tax returns for the self-employed part anyway, so why not put it all through the same method.

Things you need to do/know, assuming that this whole area is quite new to you, are:

• register as self-employed with Inland Revenue. You will then pay NI contributions of just over £10 per month throughout the year, plus a % of income at end of year.

• you'll need to do tax returns, so either have a look at the forms yourself, or get yourself an accountant (tax specialist ideally). Even though I'm an accountant myself I still have a tax accountant do this for me!

• get your clients to raise purchase orders for the work that they want you to do - if there's ever any question over whether you are self-employed or employed then this is one of the best pieces of 'evidence' that you can have

• set your hourly or daily rates building in the fact that you won't get paid holiday, paid sick leave, pensions etc etc. To convert to an equivalent salary comparison, consultants tend to assume 200 utilised days per year.

• you probably won't pay any income tax for a long time initially (exact period depends when in year your trading starts, but for me it was over 18 months), but then you'll end up with a big bill, so make sure that you save income accordingly. We have a flexible mortgage account that money goes into during the year, then we pull it out again in Jan and July when the taxman comes knocking. saves a fortune in mortgage interest in the meantime (both DH and I are self-employed, so it's a double whammy effect!)

• as far as mat pay goes, I assume that you've already looked into Maternity Allowance (can't remember if we've talked about this before or not), as it sounds like that's what you'd get rather than SMP

• keep all of your receipts and paperwork in order throughout the year. i was a bit lax in keeping some of my VAT receipts, as I wasn't intending on registering for VAT, but then discovered when I did have to register that you can back claim for 2 years worth of goods, so had to get a copy sent to me of the VAT invoice from when I bought my laptop.

Happy to help further if I can

Fangache - sometimes I think that you are leading my life! I've seen loads of posts from you over the last few months where I've thought - 'oh, she's just like me', and now I find that you are also a contractor. That's more spooky than any halloween names!

(sorry for hijack teuch)

Really Bewitched?? Who are you normally? Blackduck?

No, I'm normally Tabs (named after character from Bewitched in RL). I often haven't posted on threads where I've seen similarities (no need to express the same view twice ), so you're not likely to have noticed it yourself. Of course now you'll ask what and I won't be able to remember most of them, but there's def similarities in the level of fun we had at uni, and I've been a diver for years (sharks aren't so scary you know ), so there's a couple to be going on with!

lol Bewitched - I'm sh*tting myself!!!!

They can smell fear though

Won't be difficult..... I think my DH will smell it too.

sharks??? you two are both mad - or are you really just one...?

Thanks for the advice and I might come back to you for more!

I work on a funded project and am currently employed 1/2 time (was fulltime til dd born). Our funding comes to an end in March but looks like we'll get continuation for 5 months then another 3 years. The other 3 project officers work freelance where as I'm an employee, I've now got the opportunity to change to being freelance.

Can anyone offer advice? The payrate is loads better for being freelance but there's obviously the tax/NI issues plus I'll have to sort out some public liability insurance. But the thing I'm most concerned about is we want to have another baby in the next 2 years. If I have a contract for 3 years of freelancing work then take a 6 month maternity leave break in the middle of it what happens? Do I automatically lose the rest of the work?

I think I've also heard somewhere that if you freelance for the same people continously for a long period you then have to be made an employee; is this right?

just bumping for you BT

whoops - ignore my pregnancy soft head!! I did that ages ago

imagine my surprise when I find a link about EXACTLY what I was gong to post...

groan...ignore last message...that was for another thread!!

BouncyTigger - just spotted your question on here - are you still looking for answers?