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New to contracting - advise on accounting service etc.

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    New to contracting - advise on accounting service etc.

    Hello together,

    I hope this is the right sub forum.

    Just recently I have been offered temporary contracting work (~ 6 months). As I have never done this before, I came across this forum and really appreciate the community and information provided. I spoke to several accounting firms and wondered whether you have some experience.

    A bit of background - I could do a contracting role for a limited period of time and have been an employee up until now. I looked into different models sole trader, LTD and Umbrella and tried to find out what is best. Generally it seems that Umbrella is best if it is only for a short period, but depending on rate and whether I already worked this year, LTD might be the "better" option. Trying to compare the different accounting services is very difficult as I felt they wanted to offer more than required.

    Do you have any experience to share? E.g. would sole trader be more suitable? Which accountancies have been proven to be good for the cases of a short period (e.g., no hidden fees, adequate support on the right solution).

    Currently, I don't think that I would extend contracting beyond this period but ofc who knows what the future holds.

    Many thanks!

    #2
    You cannot work through an agency as sole trader.
    Down with racism. Long live miscegenation!

    Comment


      #3
      Couldn't be a worse time to enter contracting in it's entire history.

      Check the First Timers links on the right hand side. You have an awful lot to catchup on.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Thanks - yeah I went through it and I have to agree - there is a lot going on and to get the head around.

        Comment


          #5
          Originally posted by CaptainBiBop View Post
          Hello together,

          I hope this is the right sub forum.

          Just recently I have been offered temporary contracting work (~ 6 months). As I have never done this before, I came across this forum and really appreciate the community and information provided. I spoke to several accounting firms and wondered whether you have some experience.

          A bit of background - I could do a contracting role for a limited period of time and have been an employee up until now. I looked into different models sole trader, LTD and Umbrella and tried to find out what is best. Generally it seems that Umbrella is best if it is only for a short period, but depending on rate and whether I already worked this year, LTD might be the "better" option. Trying to compare the different accounting services is very difficult as I felt they wanted to offer more than required.

          Do you have any experience to share? E.g. would sole trader be more suitable? Which accountancies have been proven to be good for the cases of a short period (e.g., no hidden fees, adequate support on the right solution).

          Currently, I don't think that I would extend contracting beyond this period but ofc who knows what the future holds.

          Many thanks!
          Is it inside or outside IR35?


          Sent from my iPhone using Contractor UK Forum

          Comment


            #6
            Go umbrella. You can always switch to LtdCo later if it proves advantageous which, right now, it won't. And it will give you time to read and understand what the first timer guides are telling you.

            LtdCo contracting is a career change, and quite a major one. Don't do it until you are sure you know (or at least, mostly know!) what you are doing.

            As for which umbrella, lots of heavy hints on here about Linus's sister and her clarity of vision...
            Blog? What blog...?

            Comment


              #7
              Hi both,

              many thanks - much appreciated!

              It is difficult to say whether it is in or outside of IR35 - could potentially be both (from my understanding).

              I was initially thinking Umbrella might be the better solution, but given that I have been employed until now, the take-home difference between both seems to be way higher (but not sure how reliable these calculators are).

              On a related note does anyone has experience with CleverAccounts?

              Some accountancy seem to offer a switch to umbrella in case a contract has been found to be inside IR35 and I wonder whether this might be a good solution in case it is unclear whether it is inside or outside IR35.

              Comment


                #8
                Originally posted by CaptainBiBop View Post
                Hi both,

                many thanks - much appreciated!

                It is difficult to say whether it is in or outside of IR35 - could potentially be both (from my understanding).

                I was initially thinking Umbrella might be the better solution, but given that I have been employed until now, the take-home difference between both seems to be way higher (but not sure how reliable these calculators are).

                On a related note does anyone has experience with CleverAccounts?

                Some accountancy seem to offer a switch to umbrella in case a contract has been found to be inside IR35 and I wonder whether this might be a good solution in case it is unclear whether it is inside or outside IR35.
                Calculators are unrealistic 90% of the time. Treat with great caution. Look for around 70% retention via Ltd or 55% via umbrella, depending also on your particular tax position and coding.

                Ignore IR35, you aren't yet in a position to make that decision. Get the contract reviewed by an expert and go from there.

                But use an umbrella for safety. You have no idea how much you don't know yet.

                And I've given you a solid steer on which umbrella to use...
                Blog? What blog...?

                Comment


                  #9
                  I would ask why you want to go contracting. Put aside the "worse time to try" arguments and understand your motivations first.

                  I get the impression that you've recently left employment or were made redundant and are looking to take up any opportunity that presents itself. That's not a bad reason and definitely better than most.

                  If, as you say, you may not bother sticking with contracting then I would suggest to go with an umbrella. It gives you the space to decide whether you actually want to run a limited company, with all the responsibilities that entails, and pursue the 'contractor lifestyle' (whatever that is to you). If all goes well, you could get extended or offered more work elsewhere. At that point you can decide whether to stick with the umbrella or go for the Ltd Co route.

                  Comment


                    #10
                    Hi, thanks so much for the advice

                    Yeah exactly, the situation presented itself and may lead to something more permanent.

                    From what I gathered, the difference in Take Home between Umbrella and LTD can be relative significant in this case - I was just wondering how much work is involved with an LTD when e.g., using an accountancy service, it seems that they cover quite a lot, set up, IR35 review, closing the LTD. This makes me believe that it could be worth a try, but I might be very naive and there might be way more involved (timewise and money-wise) that I don't see right now.

                    Comment

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