Question for self employed contractor, sole trader types
Discussion
Marvelous. My original post got wiped!
Basically, how quickly will you get more work if you lose the current contract? Personally, I like to have many months of salary in the bank as a buffer but I am quite cautious..
In terms of spending on toys, again, I'm quite conservative and like to know that the tax man has had all he's entitled to before I start playing.
Basically, how quickly will you get more work if you lose the current contract? Personally, I like to have many months of salary in the bank as a buffer but I am quite cautious..
In terms of spending on toys, again, I'm quite conservative and like to know that the tax man has had all he's entitled to before I start playing.
RacerMDR said:
OK - so, how much money do you keep as a 'buffer' to cover off risks - before you spend money on toys, unnecessary things etc?
not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
If you fail IR35 you cannot keep a buffer beyond the end of the financial year....not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
jesusbuiltmycar said:
RacerMDR said:
OK - so, how much money do you keep as a 'buffer' to cover off risks - before you spend money on toys, unnecessary things etc?
not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
If you fail IR35 you cannot keep a buffer beyond the end of the financial year....not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
RacerMDR said:
OK - so, how much money do you keep as a 'buffer' to cover off risks - before you spend money on toys, unnecessary things etc?
not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
Will be down to the individual, Shirley?not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
LittleBro said:
jesusbuiltmycar said:
RacerMDR said:
OK - so, how much money do you keep as a 'buffer' to cover off risks - before you spend money on toys, unnecessary things etc?
not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
If you fail IR35 you cannot keep a buffer beyond the end of the financial year....not really asking for numerical cash amounts - more, 12 months salary, or enough to pay mortage for 6 months or whatever.
TA!
i am outside IR35 - 
i was thinking 12 months worth of money in bank - after tax is paid on it would be about right.
Not withstanding if the scumverment manage to find some lies to try and take more tax. To be fair at 21% corporation and then 40% - they can f
k right off if they want anymore!
i was thinking 12 months worth of money in bank - after tax is paid on it would be about right.
Not withstanding if the scumverment manage to find some lies to try and take more tax. To be fair at 21% corporation and then 40% - they can f
k right off if they want anymore!I just had a luck on HMRC website about an IR35. I'm still none the wiser. Does anyone care to explain?
I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
elster said:
I just had a luck on HMRC website about an IR35. I'm still none the wiser. Does anyone care to explain?
I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
If you are a Sole Trader, you can ignore IR35 completely. It only relates to situations where an "intermediary" entity is used by an individual to stop that individual from being treated as an employee. The Revenue look on limited companies or partnerships as "intermediaries" in these circumstances.I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
A sole trader is, by definition, not trying to place an intermediary between himself and the people he is working for or selling to.
its a can of worms - to be fair - get an accountant to look at it. I think the real trouble comes in that the scumverment can basically say anything they want and do you if they feel like it.
Its one of those vague, one rule for them, another rule for us things.
There are things you can do - like make sure your contract is compliant with the rules. Essentially, you just have to be behaving as a company, not as a 'employee' claiming company status for tax breaks. As 60% tax isn't obvious enough for the lying fkers.
Its all bull st. Your best bet is to employ someone - then you are clear i believe.
Its one of those vague, one rule for them, another rule for us things.
There are things you can do - like make sure your contract is compliant with the rules. Essentially, you just have to be behaving as a company, not as a 'employee' claiming company status for tax breaks. As 60% tax isn't obvious enough for the lying f
kers.Its all bull s
t. Your best bet is to employ someone - then you are clear i believe.Eric Mc said:
elster said:
I just had a luck on HMRC website about an IR35. I'm still none the wiser. Does anyone care to explain?
I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
If you are a Sole Trader, you can ignore IR35 completely. It only relates to situations where an "intermediary" entity is used by an individual to stop that individual from being treated as an employee. The Revenue look on limited companies or partnerships as "intermediaries" in these circumstances.I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
A sole trader is, by definition, not trying to place an intermediary between himself and the people he is working for or selling to.
Eric Mc said:
If only it was as easy as that.
If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
But what is it exactly. I don't believe it is relevant to me, but I would like to know.If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
Sorry if I am being a bit stupid.
elster said:
Eric Mc said:
elster said:
I just had a luck on HMRC website about an IR35. I'm still none the wiser. Does anyone care to explain?
I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
If you are a Sole Trader, you can ignore IR35 completely. It only relates to situations where an "intermediary" entity is used by an individual to stop that individual from being treated as an employee. The Revenue look on limited companies or partnerships as "intermediaries" in these circumstances.I'm a sole trader, however I don't know anything about money. I leave that for my mum to sort as she is an accountant she deals with all the invoices and payments. I just do work, then when need money ask for it. I think I have about a buffer of a couple of months to pay any contractors. This is only the case at the moment as a lot of money takes about 6 months to come in from the current biggest client. So I know I'm not flush as always waiting.
I think it depends on who your clients will be.
A sole trader is, by definition, not trying to place an intermediary between himself and the people he is working for or selling to.
The problem, of course, is that somewhere between the blatant misuses and the "no problem" businesses there are many variations and shades where deciding on the true nature of the relationship between the company and who it is working for is not all that clear-cut.
Edited by Eric Mc on Thursday 9th October 21:33
elster said:
Eric Mc said:
If only it was as easy as that.
If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
But what is it exactly. I don't believe it is relevant to me, but I would like to know.If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
Sorry if I am being a bit stupid.
If the answer is "no" - in other words, the only thing that is preventing them from putting you on their payroll is because you are operating through your own limited company - than it is highly likely that IR35 WILL apply.
Eric Mc said:
elster said:
Eric Mc said:
If only it was as easy as that.
If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
But what is it exactly. I don't believe it is relevant to me, but I would like to know.If you act like an employee, are treated as an employee and behave in the manner of an employee, then IR35 applies.
If you act like a business, look like a business, do things that only businesses do, then you will probably escape IR35.
Sorry if I am being a bit stupid.
If the answer is "no" - in other words, the only thing that is preventing them from putting you on their payroll is because you are operating through your own limited company - than it is highly likely that IR35 WILL apply.
Say someone works full time for one company but is charging them through their own company, this is when it applies. As one example. This kind of thing?
That is pretty much the type of situation caught by IR35.
It is all about whether the company is genuinely trading or not. Or even whether one contract undertaken by the company is properly construed as being part of its normal trading.
Many years ago (WAY before IR35 was ever thought of) a court case was heard to see if a person who was working for someone was an employee or whether he was a sole-trader/self-employed. The judge in the case (it dates back to Victorian times) said that, in order to ascertain whether a person was trading or not, they would need to display sufficient "badges of trade".
These badges are:
i) the individual controls and largely supervises his own work
ii) he supplies his own tools and equipment
iii) he takes out his own insurances
iv) he is ultimately liable for the work he does
v) he can employ his own staff
vi) he can substitute a different person to take his place if necessary
vii) he isn't paid when he isn't there (sickness, holidays etc)
viii) he is not included in any activities or facilities reserved for the employees of the businesses he works for
ix) he has his own business premises
x) he openly advertises his goods and services
xi) the business has multiple customers
To qualify as a trader, a good number of the above points must be valid for what he does.
IR35 regulations are based on these "badges of trade". If your limited company can tick "yes" to as many of these points as possible, you are defintely steering away from IR35.
If you find it difficult to say yes to most of these points, you could be in trouble.
It is all about whether the company is genuinely trading or not. Or even whether one contract undertaken by the company is properly construed as being part of its normal trading.
Many years ago (WAY before IR35 was ever thought of) a court case was heard to see if a person who was working for someone was an employee or whether he was a sole-trader/self-employed. The judge in the case (it dates back to Victorian times) said that, in order to ascertain whether a person was trading or not, they would need to display sufficient "badges of trade".
These badges are:
i) the individual controls and largely supervises his own work
ii) he supplies his own tools and equipment
iii) he takes out his own insurances
iv) he is ultimately liable for the work he does
v) he can employ his own staff
vi) he can substitute a different person to take his place if necessary
vii) he isn't paid when he isn't there (sickness, holidays etc)
viii) he is not included in any activities or facilities reserved for the employees of the businesses he works for
ix) he has his own business premises
x) he openly advertises his goods and services
xi) the business has multiple customers
To qualify as a trader, a good number of the above points must be valid for what he does.
IR35 regulations are based on these "badges of trade". If your limited company can tick "yes" to as many of these points as possible, you are defintely steering away from IR35.
If you find it difficult to say yes to most of these points, you could be in trouble.
Edited by Eric Mc on Thursday 9th October 21:53
Eric Mc said:
That is pretty much the type of situation caught by IR35.
It is all about whether the company is genuinely trading or not. Or even whether one contract undertaken by the company is properly construed as being part of its normal trading.
Many years ago (WAY before IR35 was ever thought of) a court case was heard to see if a person who was working for someone was an employee or whether he was a sole-trader/self-employed. The judge in the case (it dates back to Victorian times) said that, in order to ascertain whether a person was trading or not, they would need to display sufficient "badges of trade".
These badges are:
i) the individual controls and largely supervises his own work
ii) he supplies his own tools and equipment
iii) he takes out his own insurances
iv) he is ultimately liable for the work he does
v) he can employ his own staff
vi) he can substitute a different person to take his place if necessary
vii) he isn't paid when he isn't there (sickness, holidays etc)
viii) he is not included in any activities or facilities reserved for the employees of the businesses he works for
ix) he has his own business premises
x) he openly advertises his goods and services
xi) the business has multiple customers
To qualify as a trader, a good number of the above points must be valid for what he does.
IR35 regulations are based on these "badges of trade". If your limited company can tick "yes" to as many of these points as possible, you are defintely steering away from IR35.
If you find it difficult to say yes to most of these points, you could be in trouble.
Cheers Eric It is all about whether the company is genuinely trading or not. Or even whether one contract undertaken by the company is properly construed as being part of its normal trading.
Many years ago (WAY before IR35 was ever thought of) a court case was heard to see if a person who was working for someone was an employee or whether he was a sole-trader/self-employed. The judge in the case (it dates back to Victorian times) said that, in order to ascertain whether a person was trading or not, they would need to display sufficient "badges of trade".
These badges are:
i) the individual controls and largely supervises his own work
ii) he supplies his own tools and equipment
iii) he takes out his own insurances
iv) he is ultimately liable for the work he does
v) he can employ his own staff
vi) he can substitute a different person to take his place if necessary
vii) he isn't paid when he isn't there (sickness, holidays etc)
viii) he is not included in any activities or facilities reserved for the employees of the businesses he works for
ix) he has his own business premises
x) he openly advertises his goods and services
xi) the business has multiple customers
To qualify as a trader, a good number of the above points must be valid for what he does.
IR35 regulations are based on these "badges of trade". If your limited company can tick "yes" to as many of these points as possible, you are defintely steering away from IR35.
If you find it difficult to say yes to most of these points, you could be in trouble.
Edited by Eric Mc on Thursday 9th October 21:53
Well I tick all but vi) Most of places I work are full of morons, which is why I get called in.
and viii) They still invite me to their annual "do's".
But I will stop worrying, as I think I am pretty safe.
Thanks
I wouldn't relax too much. "Substitution" is a big issue in IR35 and I would deliberately NOT attend staff dos as well. If you are treated like "staff" in some areas of the way THEY run their business, the Revenue may jump on that as an indicator that you really ARE staff.
IR35 is nasty and must be treated with the greatest respect, Any chink in your armour will be exploited by the Revenue - and having to pay a backlog of PAYE and Employee's/Employer's NI could be extremely serious and expensive.
IR35 is nasty and must be treated with the greatest respect, Any chink in your armour will be exploited by the Revenue - and having to pay a backlog of PAYE and Employee's/Employer's NI could be extremely serious and expensive.
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff