need advise about my new company

[sunny69]

Hi Guys,

I am a newbie having recently tested the waters in contracting and in the middle of my 2nd month with a client. I have set up a limited company with big dreams like most of the people before me who claims they have better control on their finances than being on a permanent job. Now all the invoices from my agency started coming direct to my bank a/c so all is fine till here. However I found out recently about IR35 status checks which everyone are compiled to do as my accountants (NW) are insisting to go for an independent review before they can advice me how much I can withdraw from my account. This prompted me to search various sites - including this forum which I found very active and informative!- to find out what is this IR35 and what I found is very appaling given that most contracts fail straight away like mine did! So the question I wish to ask you is: how on earth people 'manage' with their own companies instead of going through an umbrella company route? What I feel at this stage honestly is I want to close my company which is fairly new and go for any umbrella company which I feel would be hastle free? Needless to say that I have wasted so much money on company formation, Directors pack etc, business insurance, accountants fee and so on So can I do it and if it is then what happens to the invoices already made on my company's name? I think I am so confuged by this situation and given that I am NOT allowed to withdraw any money from my account without this status review, I think I am cornered
Please advice!

[mudskipper]

Hi Guys,

I am a newbie having recently tested the waters in contracting and in the middle of my 2nd month with a client. I have set up a limited company with big dreams like most of the people before me who claims they have better control on their finances than being on a permanent job. Now all the invoices from my agency started coming direct to my bank a/c so all is fine till here. However I found out recently about IR35 status checks which everyone are compiled to do as my accountants (NW) are insisting to go for an independent review before they can advice me how much I can withdraw from my account. This prompted me to search various sites - including this forum which I found very active and informative!- to find out what is this IR35 and what I found is very appaling given that most contracts fail straight away like mine did! So the question I wish to ask you is: how on earth people 'manage' with their own companies instead of going through an umbrella company route? What I feel at this stage honestly is I want to close my company which is fairly new and go for any umbrella company which I feel would be hastle free? Needless to say that I have wasted so much money on company formation, Directors pack etc, business insurance, accountants fee and so on So can I do it and if it is then what happens to the invoices already made on my company's name? I think I am so confuged by this situation and given that I am NOT allowed to withdraw any money from my account without this status review, I think I am cornered
Please advice!

Hi Sunny69

Check out the links on this site What is IR35? IR35 rules explained :: Contractor UK

What's really important is your working practices, although having a compliant contract helps.

[northernladuk]

So the question I wish to ask you is: how on earth people 'manage' with their own companies instead of going through an umbrella company route?

Sounds odd but we manage them by managing them. A contract is not cast in stone, it is an agreement made between a client and a supplier. This agreement will come with a cost, both of which are negotiable to the point both are not happy. If one is not happy he doesn't accept it.

It is very basic business and I am afraid if the concept eludes you you may indeed be better off with an Umbrella or permie land becuase is the most basic element of contracting. It is going to get a hell of a lot more complicated from here on in.

started coming direct to my bank a/c

Just to be pedantic to make a point. Is this YOUR bank account or your company bank account. The two are very different.

[malvolio]

Go here - Going freelance | PCG

Download the Guide

Read it very carefully.

You have no idea how much you do not know. You also don't have a lot of time to find out. So come back with questions when you have a clearer idea of what you are doing.

[Wanderer]

However I found out recently about IR35 status checks what I found is very appaling given that most contracts fail straight away like mine did!

Hold on a minute. How do you know it failed IR35? Did you get it professionally reviewed (many accountants will do this for you) or is it just your interpretation of the rules? If you haven't had it reviewed professionally then get it done before you decide that you are IR35 caught. You could be making a very expensive assumption here.

So the question I wish to ask you is: how on earth people 'manage' with their own companies instead of going through an umbrella company route? I think I am so confuged by this situation and given that I am NOT allowed to withdraw any money from my account without this status review, I think I am cornered

Let me tell you a dirty secret. It you are the director and only shareholder of your LTD company then you can withdraw money from the company as a directors loan whenever you want and take as much as you want. You DON'T need anyone's permission to do this, just tell the accountant it's a "director's loan" and you will pay it back out of salary or dividend once IR35 has been assessed. Don't be bullied into taking it as salary in the mean time until your IR35 status is assessed or anything silly like that. Your accountant can simply account for it as salary or dividends later on once your IR35 status is clarified.

The reason they are telling you not to take any money is that they want to be sure of what your company tax bill is going to be and they will be able to advise you exactly how much you can take in salary or dividend and how much you have to leave in the company account. They don't want you to spend all the company money and then have none left when it comes time to pay your PAYE/NI/VAT/CT because you will get yourself in a big load of trouble.

A word of warning though, there are special rules for loans over £5000 or loans that are still outstanding 9 months after the end of your companies tax year. Only take this loan if it's less than £5000 and it is a short term measure until you get your accounts sorted out.

If they start mumbling about tax implications of directors loans then ask them straight up, "If I take a director's loan of less than £5000 and pay it back before the end of the company tax year, is there any tax liability?". It gives them slightly more work to do but there is no reason why you shouldn't do it if you run your company properly.

[Halframhalfbiscuit]

NW suggested to me I have my contract reviewed by QDOS (I think that was what they are called?).
They found a couple of changes that needed making, agency (V-HR) were happy to do this and the contract then complied to IR35 rules according to QDOS.