self employed/ self assessment or set up limited company?

[malks222]

Been reading up on the forum for a while now and seems theres some knowledgeable people on here with respect to some of this. So im looking for some advice as to whether its better for me to operate under an umbrella company with my UTR nr and fill out my self assessment etc…. or would I be better to set up a limited company and go down this route?

I work in construction as a quantity surveyor and have been working on a contract basis for over a year. I done my self assessment for my first few months of self employment (11/12 financial year) and my tax bill was for just over 10%. I had a friend (chartered accountant) help with my self assessment.

I’ve started a different contract and my rate has improved and it looks like im going to make quite a bit more in this financial year. Im quite happy operating the way I am at the moment, but wondering if there are any advantages to me setting up a limited company and working that way. sorry if its quite vague, but if you need more info let me know.

[contractor]

Hi,

Have a look at http://www.contractoruk.com/first_timers/setting_u... It's geared towards IT but it should help nonetheless.

Basically once your income from contracts and employment gets into the higher rate area (40K+ pa), limited company becomes a better bet.

[Eric Mc]

Speak to an accountant.

General rule of thumb - if your net profit is over £40,000, then a limited company might be beneficial from a tax point of view.

However, there are lots of factors you will need to be aware of - not all of them tax related.

[malks222]

looks like a sit down with an accountant may be in order. just had a call with a company about a 12month contract that would be well into the figures mentioned.

as for the 10% for last period, it was only a few months worth of self employed work and I did have quite a bit of expense through travel for that role. so my 40p/mile tax free allowance more than helped on that. but he def didnt fudge figures as he wouldn't let me get too creative!

[Eric Mc]

You are obviously working out the percentage by looking at your Gross Income before costs rather than the taxable net profit.

You are thinking like an employee.

If you are moving into the world of comntracting, you need to move your mindset into that of a business - rather than a job or employment.

In reality, people who are truly operating as contractors (whether self employed or through a limited company) should be posting their queries in the "Business" forum rather than the "Jobs and Employment" forum.