Fixed Price Contracts, Tax & NI Contributions

[Krise]

Afternoon all

I have been offered some fixed price contract work project managing a couple of projects for a set fee.

Can anyone tell me how I go about paying the taxman as every other role I have had has been PAYE.

The value of the contracts is not large enough yet to set up as a company and pay myself a salary.

Im a bit lost as the cheques will be made out to myself and I need to work out how I pay the taxman, and NI.

Thanks

Krise

[Eric Mc]

It looks like you are now a sole trader. How many other customters have you got? Where will you be advertising your trade?

[Krise]

No other customers just work for 1 company

[Eric Mc]

Hmmm - it looks like they intend to treat you as IF you are self employed. However, it looks to me that you are not really self employed - but a short time temporary employee. On that basis, they should really put you on "their books" and deduct PAYE and NI from what they pay you.

If you go ahead on a self employed basis YOU must -

notify HMRC that you have commenced Self Employment within three months of commencing your self employment

start paying the Self Employed Class 2 National Insurance comntributions (or apply to be exempted from making these payments if appropraite)

complete a Self Assessment tax return for the year in which you have self employed income (i.e. tax year 2010/11)

pay the self employed Income Tax (and Class 4 NI liability) arising for 2010/11 by 31 January 2012

Hope that helps.

[Krise]

Yup makes sense, Thanks Eric, however in the past 5 Mins I have just been called and offered more work, to much for me so I am thinking about possibly taking on a couple of staff now (amazing 1 interview in 3 months, didnt get the job but now the comnpany are throwing me contract work !!), how complex. tax wise will things get ?

Would i be best of getting an accountant involved now rather that try and muddle through this myself ?

[ewenm]

Krise said:

Would i be best of getting an accountant involved now rather that try and muddle through this myself ?

Definitely.

[Eric Mc]

Krise said:

Yup makes sense, Thanks Eric, however in the past 5 Mins I have just been called and offered more work, to much for me so I am thinking about possibly taking on a couple of staff now (amazing 1 interview in 3 months, didnt get the job but now the comnpany are throwing me contract work !!), how complex. tax wise will things get ?

Would i be best of getting an accountant involved now rather that try and muddle through this myself ?

Blimey, from being iffy sole trader to big time employer in ten minuites. That's what I call rapid growth.

Seriously though, if things are moving that fast, I would recommend that you get an accountant on board as quickly as you can. You may need to look at operating through a limited company if the activity is going to start off at a reasonable level.

[Krise]

I know, I Moved back to the North East from London after 10 years in Dec last year,

Must have applied for 400 roles since Dec for work in the North East, Up until last Friday I have only had 1 interview, didnt get the job, but have secured a load of contracting work from the company, Had a really positive interview yesterday, and got a call this morning to go for an interview tomorrow !!

Still wont complain about it as things are dire, I mean extremely bad for job hunters in the North at the minute.

[Eric Mc]

Sounds promising.

Best of luck.