My Experience - Your Advice, Comments and Opinions.

[Cactus]

Hi all,

I've been following most of the posts for a little while on this forum and would like to cover off some questions I have…. and hopefully the information and replies will benefit others too….Apologies for the length of this post but please stay with it….

I've been contracting for a little over 2 1/2 years now, over this period I have had multiple contracts varying in length 6 Weeks, 10 Weeks, 4 Months and the longest 8 months mostly for different companies but I have been back to 2 of the companies on more than one occasion (but always with a well earned break or another contract in between).

To get paid I started off with an umbrella company for ease because I thought that it was the easiest option because at that time I didn't know how long I would be contracting for. That contract with extension ran for 6 months in total and throughout that time I was with Properity4 (I hear you sigh) which I have to say were very helpful and informative at the start when I was looking for a umbrella company but being a little naive and believing the spreadsheet and "sales guy" (very loose term I'm not going to lower the tone) that they had filled out for me based upon my circumstances things looked quite rosey. HOWEVER I couldn't legally claim for most of the "tax saving" items and wasn't prepared to do so. Their fees were/ARE extortionate and service was poor beyond belief spending many an hour on the phone to them and also ending up with a low percentage (NET) of my earnings (GROSS).

After that contract finished I moved to OrangeGenie which I am still with. So I've been with them 2 years now and on the whole I am happy with the service that they provide…. However I've a couple of gripes: I think they've grown so big in the past couple of years that I'm not getting the service that I used to get. I signed up for the OG group pension which they've never managed to take the correct contributions from me and every month I annoyingly get an email stating that they haven't been able to collect the full amount (Sigh) and more importantly I'm not totally convinced that they have done the calculations correctly on every invoice. Oh and their website isn't the greatest either... It shows old contracts as active and is fairly naff with information about "Your Account" most of the time I have to phone them up to get information.

So why the post?

I need some advice (on the below) and comments are welcome…..

Current situation: I have just got myself a contract that could potentially run approximately 9 months (3 x 3 month contracts) and it's highest paid daily rate that I've ever been on and I want to have as much of that money in MY pocket as possible while still staying "straight" with the taxman. OG through no fault of their own have lowered the daily subsistence from £20 per day (over 10.5 hours), £5 for half day and £45 if you stay away to £10, £5 and £25 respectively. To me this means my expenses are reduced by £50 per week and if I was to work away 4 nights a week it's reduced by £90. OG is now having us to collect and save our fuel VAT receipts to cover the mileage that is claimed, which is fair enough but that's another piece of admin to sort out.

So at the moment from my GROSS I pay EMPLOYERS N.I, EMPLOYEE N.I, EMPLOYEE TAX (portion of it at 40% now) and OG Fees. Then I get my net. Somewhere within that equation I don't get those deducted from the expenses that I claim.

I just cant help thinking that for a little bit more admin/time that there is a better way of getting a higher percentage of my gross? Whether that means owning my own company and paying an accountant to help run the books by paying myself a minimum wage and the rest in dividends? or buying into one of the managed services that OG/Giant/SJD or PCG provide? Even after all the insurances etc...

Is owning your own company time consuming in regards to Admin? Because I don't want it to distract me from the "day job".

How much are accountancy fees and are they normally flat rates? Does an accountant save your company more money than the fees that it charges? Do they make you aware of what you can claim for that I would normally pay out of my own pocket For Example Laptop, I.T equipment, Book, Training, Mobile Phone/Phone Bill, Broadband, Website, out of pocket expenses, Daily Subsistence etc. etc.

Do the accountants help you fill in self assessment forms and or tax returns?

To have a limited Company do I have to have another "named" person either as a company director or company secretary? (Which I don't want to do).

comments or advice is much appreciated.

[freshblue]

Read the PCG First Timers Guide - answers much of what you discuss.
Perhaps (can be viewed as risky) consider a composite.
A good accountant with decent IR35 review services will help you with a ltd company...SJD and Darren are recommended on here.

[malvolio]

And the admin is not that hard, basically keep track of what you spend and tell the accountant (SJD use a spreadsheet that you mail back to them quarterly for example), who will tell you what to pay to whom and when (and do most of the form-filling for you. Get it sorted and you're looking at no more than a day a month at the most.

One other suggestion if you go for a Ltd - get a debit card against your shiny new company bank account and charge your business expenses - travel, accomodation and allowable food - direct to the company. Another layer of admin then vanishes into thin air.

[EqualOpportunities]

Saw this:

Are Orange Genie going bust?

And thought of you

[XLMonkey]

Cactus, I have a nice little spreadsheet that helps work out costs and benefits for running the ltd company, including things like accoutancy costs. pm me and I'll send you a copy.

[Cactus]

Thanks for your replies guys.

Read the PCG First Timers Guide - answers much of what you discuss. Perhaps (can be viewed as risky) consider a composite.
A good accountant with decent IR35 review services will help you with a ltd company...SJD and Darren are recommended on here.

Thanks Freshblue I've found the said document and indeed it has answered a couple of my questions. I'll take a look at 1staccountancy. Cheers.

And the admin is not that hard, basically keep track of what you spend and tell the accountant (SJD use a spreadsheet that you mail back to them quarterly for example), who will tell you what to pay to whom and when (and do most of the form-filling for you. Get it sorted and you're looking at no more than a day a month at the most.

One other suggestion if you go for a Ltd - get a debit card against your shiny new company bank account and charge your business expenses - travel, accomodation and allowable food - direct to the company. Another layer of admin then vanishes into thin air.

Thanks for your reply Malvolio, Surely you must have to document what you're taking from the account and why. Sorry for being dumb but how does lessen the load on admin? Does that just mean that you don't have to process it with a payslip?

Saw this:

Are Orange Genie going bust?

And thought of you

Thanks EqualOpportunities, any more info on this.... I've had a dig around but nothing to suggest them closing.... but I am a bit worried.

Cactus, I have a nice little spreadsheet that helps work out costs and benefits for running the ltd company, including things like accoutancy costs. pm me and I'll send you a copy.

Thanks XLMonkey, PM Sent I'll look forward to having a play with the Sums.

[malvolio]

As for any expenditure, the need is for an audit trail. If what you say in your General Ledger (which is what the SJD spreadsheet is, in effect) matches transactions between your business and private accounts, then that will suffice. Supporting paperwork is always valuable (and mandatory for VAT-related items, for instance), so the accountant will provide payslips when they tell you what to pay to yourself and what to send to the taxman - each quarter you will be paying off the outstanding PAYE and NICs.

Really, it's not complicated once you get the habit. Just remember that YourCo and You are two completely different beings, with their own money, expenses and tax liabilities - the difference is nobody is going to audit your personal accounts but they will want to see YourCo's, so everything must be recorded. Ergo, how much time it takes depends on how many transactions, and for most of us that's not a big number!

[VectraMan]

To have a limited Company do I have to have another "named" person either as a company director or company secretary? (Which I don't want to do).

You need a company secretary, but there are people who will do this (for a fee). I recently created a Ltd company with EACBS for this reason (think it was £50 extra per year). I'm sure most get partners/friends/family to do this, but I'd rather keep these things impersonal.

Have to say though that EACBS took 2 weeks to get around to it (Christmas was in the way, but still), so I'm not entirely sure I'd recommend them.

That's a good tip about a company debit card. Hadn't thought of that - I'll definitely take up that one.

[cojak]

Mal,

My accountant has just stopped me using my debit card for general expenditure - he said that I could only use it if the invoice has Cojak Ltd on it.

[malvolio]

Ask him to talk to my accountants then. I've been using a company debit card for the last 10 years without problems. You need an audit trail, you don't need a PO.