JoeDavola Posted October 5, 2016 Share Posted October 5, 2016 Further to my earlier post about doing contracting work as a programmer, I've been told I need to set up as a limited company in order to be paid - I understand I can do this online, but if anyone else has any advice about this please let me know. What I'm most concerned about is: - how much of a cost/hassle this is likely to be (paying an accountant ect...) given that I've not been guaranteed any work yet or told in any quantifiable way how much work will be coming my way - if I set the company up and get some payment into it, will my currently employer end up finding out? I'm not working on their time, but I have a suspicion that if they think I'm doing contract work in the same industry that they're employing me in, they'll kick up a stink or at the very least I'll draw unwanted attention towards myself. Link to comment Share on other sites More sharing options...
Monkey Posted October 5, 2016 Share Posted October 5, 2016 I have liturally just done this myself. I use a one stop shop type accountant, they did everything for me. Set the business up, all my tax stuff, the ly even tell me how much money i can take out each week. And they do my PAYE stuff too. I pay them £175 per month, but they make sure all my expenses are in place etc. And its hastle i dont have to worry about Link to comment Share on other sites More sharing options...
Bloo Loo Posted October 5, 2016 Share Posted October 5, 2016 why a LTD?..why not a Sole Trader, an LLP or any other business design? Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 3 minutes ago, Monkey said: I have liturally just done this myself. I use a one stop shop type accountant, they did everything for me. Set the business up, all my tax stuff, the ly even tell me how much money i can take out each week. And they do my PAYE stuff too. I pay them £175 per month, but they make sure all my expenses are in place etc. And its hastle i dont have to worry about You are being seriously over charged there. Nixon Williams is £95+vat a month and there are a lot of others who are cheaper than that. I think the general consensus on contractoruk is to try and find an accountancy that uses Freeagent. My advice would be to head over to http://www.contractoruk.com/ and start reading the first timer guides.. Dont' however venture into the general forum there unless you are a very brave man.... Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 6 minutes ago, Bloo Loo said: why a LTD?..why not a Sole Trader, an LLP or any other business design? Work given to use via an agency has to be via a Limited Company (Agency act 1978 from memory). Companies may be willing to give you work as a sole trader but its not worth their hassle most of the time nowadays. I'll leave it as that as I can bore for England and these type of topics - it's best to find a decent source of information, read it and then ask questions. Link to comment Share on other sites More sharing options...
spyguy Posted October 5, 2016 Share Posted October 5, 2016 9 minutes ago, JoeDavola said: Further to my earlier post about doing contracting work as a programmer, I've been told I need to set up as a limited company in order to be paid - I understand I can do this online, but if anyone else has any advice about this please let me know. What I'm most concerned about is: - how much of a cost/hassle this is likely to be (paying an accountant ect...) given that I've not been guaranteed any work yet or told in any quantifiable way how much work will be coming my way - if I set the company up and get some payment into it, will my currently employer end up finding out? I'm not working on their time, but I have a suspicion that if they think I'm doing contract work in the same industry that they're employing me in, they'll kick up a stink or at the very least I'll draw unwanted attention towards myself. It depends. The cost of a Ltd co depends on how much money and activity you generate. A Ltd Co does not have to be expensive. There's some hoops to jump thru and the like.. If you're just putting your salary thru it then its not going to cost much in running fees. As far as current employ goes, what do you T+Cs say? Unless your employee is paying you 7x24 then they cannot stop you - bar non competes and the like. Dont be tempted to do anything on their site, even with your own kit. You employee might be able to find out - just look up your name on companies house and pay for the accounts - eventually. Be disciplined about setting aside time + place for your own stuff. Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 1 minute ago, spyguy said: It depends. The cost of a Ltd co depends on how much money and activity you generate. A Ltd Co does not have to be expensive. There's some hoops to jump thru and the like.. If you're just putting your salary thru it then its not going to cost much in running fees. As far as current employ goes, what do you T+Cs say? Unless your employee is paying you 7x24 then they cannot stop you - bar non competes and the like. Dont be tempted to do anything on their site, even with your own kit. You employee might be able to find out - just look up your name on companies house and pay for the accounts - eventually. Be disciplined about setting aside time + place for your own stuff. The cost of running of an accountant dealing with a simple limited company is the same if the company earns £1 or £250,000. They need to generate accounts and file them with companies house and HMRC regardless. The cost of that is probably £800 a year... Payroll is another issue but as you are still with your employer its a faff you can avoid just be taking dividends from the companies post tax profits. Check what your terms and conditions of your current employment contract says. Mine was well written and didn't allow me to do things under certain circumstances in a way that lawyers knew would stand up in court. Yours may not be that good but its may not be worth the risk if you like your job and your employer doesn't want you to do other work... Link to comment Share on other sites More sharing options...
ccc Posted October 5, 2016 Share Posted October 5, 2016 I find it highly unlikely you NEED to open a LTD company. The other option is an umbrella company. Loads of folk use them. They are covered for the liability insurance and all - look after your payroll and invoices from the client - take off their fee and spit out the rest to you. You will take home less than via a ltd company - depending on how much salary you pay yourself, cost of accountant etc.. however its much less hassle and organising. If your not sure if this will be a long term gig or plan - and you think you generally prefer permanent work [You have said this before I think ?] then just do the umbrella way to start off with and see how it goes. That's my advice anyway. Parasol does it and loads of others. Just google. PS - Its not some dodgy off shore scheme. Fully HMRC backed. Link to comment Share on other sites More sharing options...
JoeDavola Posted October 5, 2016 Author Share Posted October 5, 2016 Yeah I have to say this sounds like a lot of hassle and cost considering that this bloke sounds like he's probably only offering me sporadic work. If he was offering me even 10 hours a week at my contractor rates then it would be worth it - but I got the vibe that he wouldn't even be committing to that. Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 20 minutes ago, ccc said: I find it highly unlikely you NEED to open a LTD company. The other option is an umbrella company. Loads of folk use them. They are covered for the liability insurance and all - look after your payroll and invoices from the client - take off their fee and spit out the rest to you. You will take home less than via a ltd company - depending on how much salary you pay yourself, cost of accountant etc.. however its much less hassle and organising. If your not sure if this will be a long term gig or plan - and you think you generally prefer permanent work [You have said this before I think ?] then just do the umbrella way to start off with and see how it goes. That's my advice anyway. Parasol does it and loads of others. Just google. PS - Its not some dodgy off shore scheme. Fully HMRC backed. An umbrella company while being employed by someone else is really not a combination I would recommend to anyone - this isn't about going contracting its more how to do some work on the side... As for Parasol its a shame we don't have the :eek and :eek: emoticons on this site, one of the few other contractors here uses them and they are allowing things through as expenses that they shouldn't be nowadays with very dodgy justifications.... Link to comment Share on other sites More sharing options...
JoeDavola Posted October 5, 2016 Author Share Posted October 5, 2016 26 minutes ago, ccc said: I find it highly unlikely you NEED to open a LTD company. The other option is an umbrella company. Loads of folk use them. They are covered for the liability insurance and all - look after your payroll and invoices from the client - take off their fee and spit out the rest to you. You will take home less than via a ltd company - depending on how much salary you pay yourself, cost of accountant etc.. however its much less hassle and organising. If your not sure if this will be a long term gig or plan - and you think you generally prefer permanent work [You have said this before I think ?] then just do the umbrella way to start off with and see how it goes. That's my advice anyway. Parasol does it and loads of others. Just google. PS - Its not some dodgy off shore scheme. Fully HMRC backed. Thanks - this is superb advice; I didn't know such things existed. As you say, I'll be staying in my much-loved permie job for the forseeable, and I'm not expecting too many hours to start off with so would he happy to let an umbrealla company take a cut for the time being. Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 6 minutes ago, JoeDavola said: Thanks - this is superb advice; I didn't know such things existed. As you say, I'll be staying in my much-loved permie job for the forseeable, and I'm not expecting too many hours to start off with so would he happy to let an umbrealla company take a cut for the time being. Check your paperwork to see if you can have a second job..... It's perfectly legal for your employer not to allow you to be employed by someone else.. They can't stop you from doing work on the side but can stop you doing a paid job for someone else. And don't use Parasol..... Contractorumbrella.co.uk is the one recommended on CUK for very good reasons (if things go wrong you can publicly speak to their MD to get things sorted) or ask me to ring her or her big boss.... Link to comment Share on other sites More sharing options...
ccc Posted October 5, 2016 Share Posted October 5, 2016 Why not recommend an umbrella whilst working ? You simply get 2 P60's at the end of the year instead of one ? its a far better option than the ltd company option [Someone correct me with a decent reason why if I am wrong] if you are scared of your present company finding out you are working on the side. Just do a google name search of anyone who has their own ltd company and bingo - there you are with your company directorships from google within 0.004657 of a second. Link to comment Share on other sites More sharing options...
DEATH Posted October 5, 2016 Share Posted October 5, 2016 You don't actually need an accountant to run a Ltd company, if you are ok with numbers and the turnover is small you can sign them (the annual accounts) off yourself. Might be a problem if you go for a mortgage though and they look closely... I have had dozens of Ltds over the last 25 years and never bothered with an accountant. Seems an overkill if the turnover is less than 200k. Link to comment Share on other sites More sharing options...
ccc Posted October 5, 2016 Share Posted October 5, 2016 https://beta.companieshouse.gov.uk/ Joe you must know people in your line of work who have their own ltd company ? Try this for anyone you know and are nosey about. :) Not only can you see what companies they have/directors of - you can then have a look at that company itself and instantly see a copy of their returns, cash in bank etc.. A lot of info very quickly available. Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 1 minute ago, ccc said: Why not recommend an umbrella whilst working ? You simply get 2 P60's at the end of the year instead of one ? its a far better option than the ltd company option [Someone correct me with a decent reason why if I am wrong] if you are scared of your present company finding out you are working on the side. Just do a google name search of anyone who has their own ltd company and bingo - there you are with your company directorships from google within 0.004657 of a second. Because most employment agreements don't allow you to work for someone else.... Heck I know the ones I issue don't unless its students doing some part time work.... You probably can get away with it if you are doing are self employed or using a limited company, but HMRC notify companies when multiple companies are paying the same person as there are tax implications that both companies need to deal with. Now that's not going to be an issue if Joe's employer knows about the work and is fine with Joe doing it, it's utterly insane bordering on Gross misconduct if they don't know.. Also there are certain umbrella's I just don't trust due to things I've seen them do. Parasol is one of those... As for the limited company yes the company would need to google it to find out but at least they won't be being told by HMRC about it.... So yep its an issue but the umbrella solution is a worse one if you thought things through more and knew how these things work. And believe it or not I spend half my live on CUK (see my comments above) helping people out on things they think they know about but don't quite know enough about.... Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 14 minutes ago, ccc said: https://beta.companieshouse.gov.uk/ Joe you must know people in your line of work who have their own ltd company ? Try this for anyone you know and are nosey about. Not only can you see what companies they have/directors of - you can then have a look at that company itself and instantly see a copy of their returns, cash in bank etc.. A lot of info very quickly available. And? - its the quid pro quo for having limited liability. What you also fail to explain is how much tax an umbrella would have to take out of the payments. A limited company would be 20% corporation tax and dividend tax at 7.5% or 22.5% depending on how much was withdrawn. An umbrella would take its £50 a month to cover costs plus 13.8% Employers NI, 12% Employees NI and then income tax with some of it at 40%. It could easily reach 60% of income and make it utterly unworthwhile. Link to comment Share on other sites More sharing options...
JoeDavola Posted October 5, 2016 Author Share Posted October 5, 2016 4 minutes ago, eek said: You probably can get away with it if you are doing are self employed or using a limited company, but HMRC notify companies when multiple companies are paying the same person as there are tax implications that both companies need to deal with. Now that's not going to be an issue if Joe's employer knows about the work and is fine with Joe doing it, it's utterly insane bordering on Gross misconduct if they don't know.. Yeah this is the main question isn't it. It's not worth potentially losing a nice secure job that I really like just because I want a little bit more money on the side. I should be up front with my current employers before proceeding any further - rather than risk being 'caught'. I 'think' I'm a valuable enough employee that they wouldn't fire me but it's a big enough organization that the order might come from high enough up that they'd have no choice, especially if they suspected I was dong the double during working hours (which I wouldn't be planning on doing). I know of a software place in Belfast where a few Indian guys were caught running a small business from work - they were able to do this and do their jobs completely satisfactorily within the 8 hour working day. Nevertheless, they were basically fired on the spot and instantly escorted from the building by security. Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 25 minutes ago, JoeDavola said: Yeah this is the main question isn't it. It's not worth potentially losing a nice secure job that I really like just because I want a little bit more money on the side. I should be up front with my current employers before proceeding any further - rather than risk being 'caught'. I 'think' I'm a valuable enough employee that they wouldn't fire me but it's a big enough organization that the order might come from high enough up that they'd have no choice, especially if they suspected I was dong the double during working hours (which I wouldn't be planning on doing). I know of a software place in Belfast where a few Indian guys were caught running a small business from work - they were able to do this and do their jobs completely satisfactorily within the 8 hour working day. Nevertheless, they were basically fired on the spot and instantly escorted from the building by security. You also have to remember that your company may think that the work your doing on the side should be something that your employer should be profiting from... (That's been the case in every consultancy I've worked for). Link to comment Share on other sites More sharing options...
ccc Posted October 5, 2016 Share Posted October 5, 2016 Never realised HMRC notified other companies - fair enough if true. As for the tax implications - I know these - I stated this in my initial post on the subject. And whilst you may spend half your day on CUK helping folk about things they thought they knew about - you didn't bother to mention to Joe the very easy way anyone he works with/his employer could find out if he had a ltd company earning money on the side. I'm glad to have opened your eyes to that rather important piece of advice. Feel free to pass it on to any punters you are currently helping on CUK right now. None of us know everything. My pleasure :) Link to comment Share on other sites More sharing options...
eek Posted October 5, 2016 Share Posted October 5, 2016 17 minutes ago, ccc said: Never realised HMRC notified other companies - fair enough if true. As for the tax implications - I know these - I stated this in my initial post on the subject. And whilst you may spend half your day on CUK helping folk about things they thought they knew about - you didn't bother to mention to Joe the very easy way anyone he works with/his employer could find out if he had a ltd company earning money on the side. I'm glad to have opened your eyes to that rather important piece of advice. Feel free to pass it on to any punters you are currently helping on CUK right now. None of us know everything. My pleasure I would point out that you didn't really explain exactly how much less it would be. Limited company would give you 75% take home or so, umbrella 50% at best (you also could buy a new laptop via the company, you couldn't do that via the umbrella) My concern with your posts is that it was a perfectly example of a little bit of knowledge is a very dangerous thing - your approach means that the company would immediately find out by proxy, a limited company meant the company would only find it out if they suspected such things. And you never covered the all important fact that you can only do this if your contract allows you to do so... Link to comment Share on other sites More sharing options...
ccc Posted October 5, 2016 Share Posted October 5, 2016 You did tell him to go read up about it first so fair enough. And its not an utterly minor point I made. I just pointed out the LTD company route is public. A lot of people are not aware of that. Even though they should be. Which I suppose lessens your chances of getting 'caught' due to it of course. Link to comment Share on other sites More sharing options...
Bloo Loo Posted October 5, 2016 Share Posted October 5, 2016 2 hours ago, eek said: Work given to use via an agency has to be via a Limited Company (Agency act 1978 from memory). Companies may be willing to give you work as a sole trader but its not worth their hassle most of the time nowadays. I'll leave it as that as I can bore for England and these type of topics - it's best to find a decent source of information, read it and then ask questions. He isnt working via an agency, which would be a LTD. He is a worker, adding another layer of legal beaurocracy is probably more due to the tax situation (IR35?) and the contractor wanting to comply by simply not bothering with another entirely legitimate legal entity...the sub contractor himself. As far as contracting out the work, the contractor would recieve an invoice just the same from either legal entity. Link to comment Share on other sites More sharing options...
JoeDavola Posted October 5, 2016 Author Share Posted October 5, 2016 I searched on: https://beta.companieshouse.gov.uk/ And found that one of my co-workers; a programmer at the same level as myself in the company had a little company setup for a bit of software he'd developed and was trying to sell a couple of years ago. So if they let him do that, presumably they'd let me set something up. I'll still be checking however. Link to comment Share on other sites More sharing options...
Bloo Loo Posted October 5, 2016 Share Posted October 5, 2016 17 minutes ago, JoeDavola said: I searched on: https://beta.companieshouse.gov.uk/ And found that one of my co-workers; a programmer at the same level as myself in the company had a little company setup for a bit of software he'd developed and was trying to sell a couple of years ago. So if they let him do that, presumably they'd let me set something up. I'll still be checking however. Im sure Staples do a ready made LTD for a few quid...its a pack with a few forms...nothing to it these days. http://www.lawpack.co.uk Link to comment Share on other sites More sharing options...
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