Self Employed (Again)
Discussion
I will be starting work as a consultant soon on a 12 month contract.
I will need to be VAT registered (as i will be a project manager), but the company picks up all expenses.
Do I need an accountant if I have no expenses?
What is the special VAT scheme where I pay a discounted rate? (I will have no purchase to offset against).
How do I minimise my tax exposure?
Thanks all....(off to the classifieds)
(Eric do you take on new clients?)
I will need to be VAT registered (as i will be a project manager), but the company picks up all expenses.
Do I need an accountant if I have no expenses?
What is the special VAT scheme where I pay a discounted rate? (I will have no purchase to offset against).
How do I minimise my tax exposure?
Thanks all....(off to the classifieds)
(Eric do you take on new clients?)
Okay - just making sure.
If the basis of your contract is a day rate or hourly rates + expenses and you are VAT registered then any out of pocket expenses should be invoiced to the company +vat (yes - sounds stupid but that's how it's done).
I would advise you to get an accountant - I ran my own company for years and the input, knowledge and advice of a good accountant is priceless (well, at least worth the fee!).
There are 'special schemes' it's called flat rate and some people swear by it. I never used it on the advice of my accountant. His experience was that it attracts more 'interest', I wasn't worried about the few extra bob and could do without the grief so left it. What it does mean I believe if you go that route, is that you can't claim any VAT back on company purchases - e.g. laptops etc so something to consider.
In terms of minimising tax exposure - most people in your boat go the limited company route rather than self employed or PAYE. I did and as a result I'm not familiar with the self employed route so I'm sure someone else can advise on that. Hopefully the above still holds!
If the basis of your contract is a day rate or hourly rates + expenses and you are VAT registered then any out of pocket expenses should be invoiced to the company +vat (yes - sounds stupid but that's how it's done).
I would advise you to get an accountant - I ran my own company for years and the input, knowledge and advice of a good accountant is priceless (well, at least worth the fee!).
There are 'special schemes' it's called flat rate and some people swear by it. I never used it on the advice of my accountant. His experience was that it attracts more 'interest', I wasn't worried about the few extra bob and could do without the grief so left it. What it does mean I believe if you go that route, is that you can't claim any VAT back on company purchases - e.g. laptops etc so something to consider.
In terms of minimising tax exposure - most people in your boat go the limited company route rather than self employed or PAYE. I did and as a result I'm not familiar with the self employed route so I'm sure someone else can advise on that. Hopefully the above still holds!
You have to ask yourself what real incremental value a company like that is going to add on your relatively simple affairs compared to a sound, small privately owned practice where you can build an enduring relationship with the staff that look after your business and most likely personal tax affairs.
My view is that starting and running a company in this way is a fantastic education and becomes a bit of a hobby in it's own right. Not something to pass up if you get the opportunity.
If you're having to start up in short order you'll probably need a packaged company - again a good accountant can sort this for you. You'll also need to get your insurances in place prior to kicking off.
My view is that starting and running a company in this way is a fantastic education and becomes a bit of a hobby in it's own right. Not something to pass up if you get the opportunity.
If you're having to start up in short order you'll probably need a packaged company - again a good accountant can sort this for you. You'll also need to get your insurances in place prior to kicking off.
If you set up a limited company, you MUST engage an accountant. It is impossible to run a company properly without proper professional accounting and tax input and very few (if any) non accountants possess the required technical knowledge to prepare and complete the detailed and proscribed accounts that are required by company law, Corporation Tax, PAYE, VAT and the accounting standards as set out by the accounting profession.
As a comnsultant you will also need to aquaint yourself with the joys of IR35 and its pitfalls.
If you are essentially going to be a labour only consultant, then I would highly recommend the Flat Rate Scheme for VAT from the very beginning. HOWEVER, before yopu decide that Flat Rate really is going to be beneficial, you really do need to spend some time learning what it is all abouty AND discussing its implications with an accountant.
In certain circumstances it can actually be precisely the WRONG thing to do.
There is also the matter of PAYE and director's remuneration to consider.
As a comnsultant you will also need to aquaint yourself with the joys of IR35 and its pitfalls.
If you are essentially going to be a labour only consultant, then I would highly recommend the Flat Rate Scheme for VAT from the very beginning. HOWEVER, before yopu decide that Flat Rate really is going to be beneficial, you really do need to spend some time learning what it is all abouty AND discussing its implications with an accountant.
In certain circumstances it can actually be precisely the WRONG thing to do.
There is also the matter of PAYE and director's remuneration to consider.
To be blunt it's pretty clear you need to engage an accountant very very quickly. From your questions it's apparent you have little idea of what's involved in working as a freelance/contractor.
I suggest you read this guide over Christmas which may answer some of your questions & will point out some of the pitfalls:
http://www.pcg.org.uk/cms/index.php?option=com_con...
They have a number of 'PCG accredited accountants' although I have no idea how good they are.
I suggest you read this guide over Christmas which may answer some of your questions & will point out some of the pitfalls:
http://www.pcg.org.uk/cms/index.php?option=com_con...
They have a number of 'PCG accredited accountants' although I have no idea how good they are.
I have been self employed in aircraft engineering for some 25 years ,my advice would be to get an accountant, because as the old saying goes they will pay for themselves.
Its their job to know all the pitfalls ,if i had been good at figures i would have been an accountant but i am not ,in my view a good accountant is worth their weight in gold.
Its their job to know all the pitfalls ,if i had been good at figures i would have been an accountant but i am not ,in my view a good accountant is worth their weight in gold.
Eric Mc said:
I always thought that engineers needed to be good with figures too 
In fact, most of the figure-work in accountancy is relatively simple. It's grasp of legislation and keeping on top of rule and regulation changes that is the most difficult part of accountancy.
Yes i was being a little flipant,but as you say its the legislation that is the important bit In fact, most of the figure-work in accountancy is relatively simple. It's grasp of legislation and keeping on top of rule and regulation changes that is the most difficult part of accountancy.
Edited by fflyingdog on Friday 30th December 11:35
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