Contracting V Plates

**Maslins** · 23 June 2015, 15:47

If you're just dabbling in the world of contracting, I'd go umbrella. It's much easier (far less admin), though you'll typically pay a bit more in tax.

If you're confident you'll be contracting reasonably long term (ie minimum a year), may well be worth incorporating a Ltd Co from day one. I'd suggest even with an accountant on board it'll be a fairly steep learning curve.

Legally speaking you can go Ltd from day one without an accountant...but IMHO (and yes I may well be biased, but I'm sure many long term contractors on here would agree with me) you'd live to regret that decision.

**Noobs** · 23 June 2015, 16:00

Thanks Maslins, really appreciate the quick response. So it sounds like there is a lot involved?

The umbrella company/accountancy firm that the agency recommend are looking for a ~£25 per week, and I do wonder if that ~£600 for the next six months is really worth the services rendered?

I've been a perm for 10 years an another industry, and this contract starts next week to the end of the year c. £20 per hour. Initially, I am hoping the contract gets renewed at the EOY, I would take a perm role at the end of this term 99 times out of 100, but you never know how things pan so just trying to make the right decision before I start.

I feel confident I could get to grip with the likes of IR35, filling taxes, ni etc but I am more concerned about the volume of work involved? Is there really that much involved? And is this on a weekly/monthly basis?

Thanks for any guidance/and or links provided.

**Michael at BI Accountancy** · 23 June 2015, 16:39

Originally posted by Maslins View Post

If you're just dabbling in the world of contracting, I'd go umbrella. It's much easier (far less admin), though you'll typically pay a bit more in tax.

If you're confident you'll be contracting reasonably long term (ie minimum a year), may well be worth incorporating a Ltd Co from day one. I'd suggest even with an accountant on board it'll be a fairly steep learning curve.

Legally speaking you can go Ltd from day one without an accountant...but IMHO (and yes I may well be biased, but I'm sure many long term contractors on here would agree with me) you'd live to regret that decision.

As above. Depends on the length of time you are going to be contracting, amongst other factors that you need to consider such as; Day rate, IR35 status, legal obligations etc.

**Scrag Meister** · 24 June 2015, 07:00

As others have said if this is a tentative step into contracting then go with an Umbrella for now and see how you get on.

If this is definitely a permanent change then get an accountant and get limited, you'll pick up what needs doing as time goes on, and most accountants are happy to talk you through anything you need to know..

Congrats on the contract and Good luck

**pr1** · 24 June 2015, 07:52

for a £20/h contract (i.e. you're unlikely to exceed the basic rate tax band) and being tentative about the amount of hassle you should go umbrella, it will mean you don't need to worry about ir35 plus all the hmrc paperwork that comes with being a director of a company. An accountant (which you'd definitely need with a limited company as a newbie) is around the same as the umbrella fee anyway (£25/week £100/month, ish)

**tractor** · 24 June 2015, 08:58

....

Originally posted by Noobs View Post

Hey

So I have been looking around the forum and this appears to a great resource about contract working, I have just secured my first ever contract in an engineering company on my doorstep after 10 years of working in the Banking industry. And looking to make the most of time as a contractor and not leak any juice unesscessarily on my virgin voyage as a contractor.

A couple of questions;
1. Is it worth paying c. £20-£30 per week to an umbrella company or to an accountancy to form a ltd company?
2. If I incorporate myself, am I letting myself in for a huuuuge headache?

Really appreciate any comments or links to good threads. I am trying to soak up as much as possible.

Thanks very much

All the threads here are good! Links are to your right for first timers about just anything you will need.

I have a serious question. Do people really, seriously not look into all this before they make the jump into career changing decisions?

**Eirikur** · 24 June 2015, 12:56

First contract: Always go umbrella.
If you like contracting: When contract gets renewed or on your next contract go limited AND get an accountant

**Noobs** · 26 July 2015, 16:30

So I pretty much ignored everyone's advice and went limited. In for a ride I s'pose.

So it will be quite interesting to see how things pan out over the next 18 months. I found a good accountant who is going to do my paye scheme for £20+vat per month paid quarterly and £90+vat to once over my annual tax returns prior to sending them off. I phoned around and some of fees quoted seemed atrocious.

So in all I paid £240 to reg company plus a predicted annual of £330+vat to accountant. as apposed to £25-28 per week going umbrella which would have been in the region of ~£1450pa. We'll see if its worth the pain in 12 months time. I'll keep this thread going so I can give some advice on if this was a bad decision on my part or worked out okay in the end. I think savings like this are important to try and make when your earning <£50Kpa... my heart just wont let me pay someone 4 figures for something i can do myself. Even if I have to learn the hardway or pay for mistakes - I envisage I'll be better off financially(hopefully!!)

Now I am also thinking of buying a house OR developing a gambling/fantasy sports site in my free time which will cost me in the region £90-130K either way and I am 50/50 on what I do. Mainly depends on the lending side things which I dont think will work out from a house purchase perpective.

I do have a question though, do you guys think I should pay for the software through my limited company? this money will be from my own personal money - not contracting income. Appreciate any advice on this... happy to provide more details.

**northernladuk** · 26 July 2015, 16:47

You think 330 per month is a good deal? How much time would you give your client for 330 quid? About 5 hours? You think your accountant can help you with your finances in 5 hours a year?? Seriously??? Most decent accountants charge about 240 per month which is a good deal(ish).

Your limited company money and your personal money are completely separate things. If you are going to do something personally use personal money, do something company related use company money. Do not confuse the two. The money in the limited is NOT yours until you bring it out through the normal channels.

Time to listen to some advice?

Contracting V Plates