How to set up a company???
Discussion
I have been told that I may be needed to do some work in the Investment Banking sector as a consultant....
I have been warned that I should look into setting myself up as a contractor and looking at doing it now just in case.
Ok...
How much?
How?
Time scale?
If not set up in time does that mean I cant take the job?
If I dont get the job can i get this company to go dormant?
Anything else I have missed?
Any help is appreciated.
Cheers
I have been warned that I should look into setting myself up as a contractor and looking at doing it now just in case.
Ok...
How much?
How?
Time scale?
If not set up in time does that mean I cant take the job?
If I dont get the job can i get this company to go dormant?
Anything else I have missed?
Any help is appreciated.
Cheers
Dupont666 said:
Eric Mc said:
Why do you have to set up as a limited company?
what are the options for a self employed contractor?thought it was an umbrella company or something like that that i need to setup
There are circumstances where trading through a limited liability company might be preferable.
However, if the people you are doing business with are INSISTING that you operate through your own company, you have to ask "why?".
sorry you mis understood.... all contractors in the IT world i know of is self employed and has an umbrella company.
I have only ever worked as a permie and as such this could be my first contract and i dont have an umbrella company sorted yet, thats why i need to sort on out but have never dont it before and have been quoted at a few hundred pounds and want to see what the PHers that are contractors did.
I have only ever worked as a permie and as such this could be my first contract and i dont have an umbrella company sorted yet, thats why i need to sort on out but have never dont it before and have been quoted at a few hundred pounds and want to see what the PHers that are contractors did.
Dupont666 said:
sorry you mis understood.... all contractors in the IT world i know of is self employed and has an umbrella company.
I have only ever worked as a permie and as such this could be my first contract and i dont have an umbrella company sorted yet, thats why i need to sort on out but have never dont it before and have been quoted at a few hundred pounds and want to see what the PHers that are contractors did.
You need to do a bit of reading up on the various permutations possible.I have only ever worked as a permie and as such this could be my first contract and i dont have an umbrella company sorted yet, thats why i need to sort on out but have never dont it before and have been quoted at a few hundred pounds and want to see what the PHers that are contractors did.
NO ONE who works for an "umbrella company" is actually self-employed. They are either employees of that organisation (and suffer PAYE tax and NI on the income they recive from the "umbrella") or they are "shareholders" of the umbrella - which entitles them to be paid through dividends. There is often an element of "expense claim" payments made to these individuals too. The Revenue are very, very wary of umbrella companies where dividends and expense claims make up the bulk of the payments made to their "staff".
Some umbrella companies operate even more complex and convulted schemes in an attempt to get out of having to deduct PAYE and NI on what they pay to their "staff".
An alternative to operating through an "umbrella" company is to set up your own limited com,pany (which is what you seemed to be asking about in the thread title) and this is perfectly feasible.
However, in the case of both "umbrella" companies and your own personal limited company the individual MUST be aware of the implications of IR35 and the consequences that can befall them if it is discovered that they should have been operating its provisions.
emicen said:
spikeyhead said:
Eric Mc said:
However, if the people you are doing business with are INSISTING that you operate through your own company, you have to ask "why?".
Just about ever agency I ever talk to insists that they work with a Vat registered Ltd Co or an umbrella. The answer isn't "Because they all do".
I do know the real answer - but it has a bearing on IR35 vulnerability and everyone should be aware of this.
Eric Mc said:
emicen said:
spikeyhead said:
Eric Mc said:
However, if the people you are doing business with are INSISTING that you operate through your own company, you have to ask "why?".
Just about ever agency I ever talk to insists that they work with a Vat registered Ltd Co or an umbrella. The answer isn't "Because they all do".
I do know the real answer - but it has a bearing on IR35 vulnerability and everyone should be aware of this.
Do you have a spare 1/2 hour 
Businesses sometimes do not want the legal and tax burdens associated with taking on normal "employees" - either full time permanent staff (permies) or part time staff.
They would prefer to take these people on in some sort of "self-employed" capacity. However,. to be truly self-employed, an individual really has to show that he/she is running a trade or business (the badges of trade - as a judge once called them). If the individual cannot prove that he/she is really "trading", then the Revenue will insist that this individual should be placed on the payroll of the "employer".
If a PAYE inspection reveals that there are members of staff who's "status" has beeen wrongly applied by the employer, the full responsibility for finding the unpaid PAYE tax (and more importantly) the unpaid National Insurance contributions, falls squarely on the shoulders of the employer. It is a massive risk that some businesses take in some areas of commerce.
Many years ago, it was found that, if the individual was encouraged to operate through their own limited company, the "employer" was completely off the hook regarding the individual being recategorised as an employee.
This ploy became very common because it really worked. Indeed, from that point of view, it still works. The Revenue has no power to order a business to start treating "one man band" limited companies it hires as employees.
An added bonus of the "one man band" limited company is that the individual who owns and runs the company can manipulate his income from his own company to optimise his tax and NI position - the simple but effective technique being to maximise dividends and minimise salaries.
Ten years ago the Revenue decided they had enough of this and invented IR35. IR35 essentially says that if an individual uses a limited company or any other kind of "intermediary" vehicle as a block to him being recategorised as an employee, then IR35 applies.
IR35 basically says that the income of the one man band company is essentially the income of the individual and it will be taxed as if that individual was an employee. The BIG difference is that it is the one man band company which has the full legal responsibility of assessing whether IR35 applies, calculating the tax and NI due, reporting all this by the statutory dates and ensuring that it is all paid over on time.
In the 10 years IR35 has been around, many strategies have been devised which can go a long way to nullifying the worst effects of IR35, but IR35 still lurks in the background and it can jump out and bite - check out the decision in the recent tax case involving a company called "Dragonfly Ltd".
Businesses sometimes do not want the legal and tax burdens associated with taking on normal "employees" - either full time permanent staff (permies) or part time staff.
They would prefer to take these people on in some sort of "self-employed" capacity. However,. to be truly self-employed, an individual really has to show that he/she is running a trade or business (the badges of trade - as a judge once called them). If the individual cannot prove that he/she is really "trading", then the Revenue will insist that this individual should be placed on the payroll of the "employer".
If a PAYE inspection reveals that there are members of staff who's "status" has beeen wrongly applied by the employer, the full responsibility for finding the unpaid PAYE tax (and more importantly) the unpaid National Insurance contributions, falls squarely on the shoulders of the employer. It is a massive risk that some businesses take in some areas of commerce.
Many years ago, it was found that, if the individual was encouraged to operate through their own limited company, the "employer" was completely off the hook regarding the individual being recategorised as an employee.
This ploy became very common because it really worked. Indeed, from that point of view, it still works. The Revenue has no power to order a business to start treating "one man band" limited companies it hires as employees.
An added bonus of the "one man band" limited company is that the individual who owns and runs the company can manipulate his income from his own company to optimise his tax and NI position - the simple but effective technique being to maximise dividends and minimise salaries.
Ten years ago the Revenue decided they had enough of this and invented IR35. IR35 essentially says that if an individual uses a limited company or any other kind of "intermediary" vehicle as a block to him being recategorised as an employee, then IR35 applies.
IR35 basically says that the income of the one man band company is essentially the income of the individual and it will be taxed as if that individual was an employee. The BIG difference is that it is the one man band company which has the full legal responsibility of assessing whether IR35 applies, calculating the tax and NI due, reporting all this by the statutory dates and ensuring that it is all paid over on time.
In the 10 years IR35 has been around, many strategies have been devised which can go a long way to nullifying the worst effects of IR35, but IR35 still lurks in the background and it can jump out and bite - check out the decision in the recent tax case involving a company called "Dragonfly Ltd".
Having read the previous posts, would comment that MANY individuals trade via a Limited Company without any IR35 problem BUT there are various safeguards that should be taken such as making sure the contract between 'employing' company and Ltd Co are robust (such as those recommended by Professional Contractors Group) and taking note of the 'badges of trade' criteria - as has been said, have a good search around the net as plenty of guidance available.
In my experience, you have to structure / run things fairly poorly (or blatantly be a true employee using Ltd co structure between themselves and 'employing co') for HMRC to see through a challenge to your status. The comments that Eric makes re Dragonfly Ltd are valid BUT this was a case of things not being particularly well set up in the first place. In my experience, if there is a robust contract in place AND the individual works on different contracts over a period of time, then HMRC will back down once facts are laid out. The resources that it takes for a FULL challenge in these IR35 / status cases is huge and HMRC generally only take on cases that they percieve to be clear cut.
Get yourself a good accountant asap to advise on this.
In terms of costs of setting up a Ltd Co, it can be as little as £35-40 but my firm use Jordans (a well known reputable formation agent) to set up new companies and it is done within hours for a reasonable cost.
In my experience, you have to structure / run things fairly poorly (or blatantly be a true employee using Ltd co structure between themselves and 'employing co') for HMRC to see through a challenge to your status. The comments that Eric makes re Dragonfly Ltd are valid BUT this was a case of things not being particularly well set up in the first place. In my experience, if there is a robust contract in place AND the individual works on different contracts over a period of time, then HMRC will back down once facts are laid out. The resources that it takes for a FULL challenge in these IR35 / status cases is huge and HMRC generally only take on cases that they percieve to be clear cut.
Get yourself a good accountant asap to advise on this.
In terms of costs of setting up a Ltd Co, it can be as little as £35-40 but my firm use Jordans (a well known reputable formation agent) to set up new companies and it is done within hours for a reasonable cost.
I'm looking at doing this too 
Si for starting the thread and the others that have given advice 
I was discharged from (personal) bankruptcy last September - can I set one up yet?
If so...
What sort of costs I am I looking at for accountancy fees - I currently pay my Umbrella £20 pw, but they don't provide me with PI or anything, and I'm being told by my agency that I will need it for any new contract... So I thought I may as well look into this now (start of new FY) as well as a new umbrella that does!
There are companies that set you up for @ £35-40, but would I be better off using a local accountant that does this?
I can 'opt out' of IR35 I've been told?
Si for starting the thread and the others that have given advice I was discharged from (personal) bankruptcy last September - can I set one up yet?
If so...
What sort of costs I am I looking at for accountancy fees - I currently pay my Umbrella £20 pw, but they don't provide me with PI or anything, and I'm being told by my agency that I will need it for any new contract... So I thought I may as well look into this now (start of new FY) as well as a new umbrella that does!
There are companies that set you up for @ £35-40, but would I be better off using a local accountant that does this?
I can 'opt out' of IR35 I've been told?
ali_kat said:
I'm looking at doing this too Si for starting the thread and the others that have given advice
I was discharged from (personal) bankruptcy last September - can I set one up yet?
If so...
What sort of costs I am I looking at for accountancy fees - I currently pay my Umbrella £20 pw, but they don't provide me with PI or anything, and I'm being told by my agency that I will need it for any new contract... So I thought I may as well look into this now (start of new FY) as well as a new umbrella that does!
There are companies that set you up for @ £35-40, but would I be better off using a local accountant that does this?
I can 'opt out' of IR35 I've been told?
Si for starting the thread and the others that have given advice I was discharged from (personal) bankruptcy last September - can I set one up yet?
If so...
What sort of costs I am I looking at for accountancy fees - I currently pay my Umbrella £20 pw, but they don't provide me with PI or anything, and I'm being told by my agency that I will need it for any new contract... So I thought I may as well look into this now (start of new FY) as well as a new umbrella that does!
There are companies that set you up for @ £35-40, but would I be better off using a local accountant that does this?
I can 'opt out' of IR35 I've been told?
IF ONLY.
You can't officially "opt out" of IR35. Either it is applicable or it isn't. What you can and should do is arrange your contracts and working practices in such a way that the opportunity for HMRC ordering you to apply IR35 is minimised.
As for your other points - getting a company for £30/£40 is usually fine. I would avoid using an accountant or other professionsal for this particular task as
a) they will charge more
b) they won't necessarilly do the job any better
Annual accountant's fees vary quite a bit as they are dependent on what you are asking the accountnat to do for you.
An annual fee covering most of the company's requirements would probably start at around £700 to £800.
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