Umbrella Companies for Contractors
Discussion
Hi
My son considering leaving PAYE employment and becoming a contractor in Automotive Engineering business.He is 23 years old employed PAYE since 16 and clearly thinks Tax and NI are a pain to administer.
In short is there a recommendation for such a service used successfully and safely by others please.
Thank you
My son considering leaving PAYE employment and becoming a contractor in Automotive Engineering business.He is 23 years old employed PAYE since 16 and clearly thinks Tax and NI are a pain to administer.
In short is there a recommendation for such a service used successfully and safely by others please.
Thank you
Everyone is different but U Co's are generally not a good idea. Some contracts insist you use their U co. When I was a contractor I always asked first if there was a mandatory U Co as if there was I would not be going forward with the contract. I ran mine via a LTD. I shudder at the thought of being a contractor but having someone else dictate how and when I am paid, how they handle my tax affairs etc. One guy I worked with lost £30k because his U co failed to file his returns then ignored the various letters from HMRC etal. His bank account was closed down and the money went to the crown.
There are loads of other threads on here about how to become a contractor but the basic advice is to see an accountant to explain your circs in FULL detail, get yourself set up as a LTD and (optionally) register for VAT (of one form or another) and get some good insurance. After that start to look into things like pensions etc. Generally you can KISS if you do your own VAT return and then provide accountant with invoices and expenses at the end of the FY. Don't forget to budget for sick days, holidays, insurance, accountants fees, pension and equipment.
HTH.
There are loads of other threads on here about how to become a contractor but the basic advice is to see an accountant to explain your circs in FULL detail, get yourself set up as a LTD and (optionally) register for VAT (of one form or another) and get some good insurance. After that start to look into things like pensions etc. Generally you can KISS if you do your own VAT return and then provide accountant with invoices and expenses at the end of the FY. Don't forget to budget for sick days, holidays, insurance, accountants fees, pension and equipment.
HTH.
No start a Ltd company. The umbrellas are just a big target for hmrc and given the way hmrc operate there is no such thing as an approved scheme or guaranteed compliant way of working around ir35, the best protection is to be under the radar.
Secondly unless he's been forced to by circumstance I'd think hard about contracting at such a young age, for a host of reasons.
Secondly unless he's been forced to by circumstance I'd think hard about contracting at such a young age, for a host of reasons.
Whats your thoughts on age?
I started at 23. It was perfect for me, no kids or family so could take a 6 month contract anywhere in the world.
I stopped contracting at 27 as it no longer suited my lifestyle.
I would say 23 is the perfect age to start? The main issue is ensuring you get your finances in order as that can sting if you get it wrong. Paying an accountant before you actually start to ensure you have everything correct for your circs is a MUST.
I started at 23. It was perfect for me, no kids or family so could take a 6 month contract anywhere in the world.
I stopped contracting at 27 as it no longer suited my lifestyle.
I would say 23 is the perfect age to start? The main issue is ensuring you get your finances in order as that can sting if you get it wrong. Paying an accountant before you actually start to ensure you have everything correct for your circs is a MUST.
Perhaps I just think clients expect a certain level of knowledge and experience plus a mature attitude. But it's down to the individual and role I guess.
There's also the need as a contractor to make sure you keep up to date, especially in a tech industry, contractors don't get training etc... Its on their own back and you could quite easily get used to maintain some old s
t for a few years and realise you've been down skilled.
And last but not least the ability to go zen on the management policy and corporate nonsense, I cared far too much at 23 and actually thought I could make a change.
There's also the need as a contractor to make sure you keep up to date, especially in a tech industry, contractors don't get training etc... Its on their own back and you could quite easily get used to maintain some old s
t for a few years and realise you've been down skilled. And last but not least the ability to go zen on the management policy and corporate nonsense, I cared far too much at 23 and actually thought I could make a change.
I'm a contractor, been doing it in the IT industry for 7 years, having initially signed up with an umbrella company, I can say without doubt, he should start his own ltd co. It's cheap and easy to do, and there are loads of great accountants that specialise in running personal companies, so take all the hassle out of it, I used to be with one, and it was great, no hassle at all, and all the benefits.
Another vote for Limited Company. However, there are a couple of caveats:
Firstly, depending on his daily rate an accountant might be considered a large expense. Having an accountant, especially during the first year, is invaluable in my opinion.
Secondly, at 23 he has a lot of working years ahead of him. Given that contractors are generally expected to "do a job" how will be ensure that his skills are kept up to date and relevant, without the structured training and career progression which comes with being an employee?
Heaven forbid I'd ever put another off becoming a contractor, but you have to go into it with your eyes open and not be too dazzled by the £££.
Firstly, depending on his daily rate an accountant might be considered a large expense. Having an accountant, especially during the first year, is invaluable in my opinion.
Secondly, at 23 he has a lot of working years ahead of him. Given that contractors are generally expected to "do a job" how will be ensure that his skills are kept up to date and relevant, without the structured training and career progression which comes with being an employee?
Heaven forbid I'd ever put another off becoming a contractor, but you have to go into it with your eyes open and not be too dazzled by the £££.
For me skills loss was zero. I upskilled. I got chance to work on some stuff I normally would not and that meant I was more desirable for the next project. Its all about time and place IMHO.
The main risks (IMHO) are
Insurance
IR35
Voids
General down turn in the economy
Change in legislation
A lot of that has to do with industry though. Some industries are more resilient. Contractors in the oil industry have had a tough time for example. Banking was bad 10 years ago, but now back to full pace.
The main risks (IMHO) are
Insurance
IR35
Voids
General down turn in the economy
Change in legislation
A lot of that has to do with industry though. Some industries are more resilient. Contractors in the oil industry have had a tough time for example. Banking was bad 10 years ago, but now back to full pace.
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