Advice request: Starting limited company

Bear · 23 Jul 2015 at 13:05

Aloreth said:
On a side note, on of the guys has been contracting here for 6 years.......I have no idea how thats acceptable.

Why isn't it acceptable, the length of time is pretty irrelevant, its all about how you work. If he is working as a disguised employee, and is claiming he is outside IR35 then thats a different thing altogether.

Someone can contract for a single firm forever if they are inside IR35 or doing it via an umbrella

Aloreth · 23 Jul 2015 at 13:11

mid_gen said:
If you think you would only pay 17% on 700 pound a day, you really don't have the slightest clue what you're talking about. The tax savings really aren't that big over being an employee, especially when you factor in costs like accountants, liability insurance yada yada. The real advantages are when it comes to things like pensions.

....apart from the fact that this is the tax rate that the contractors working in my team pay..........but you know I'm sure you know best.

mid_gen · 23 Jul 2015 at 13:17

Aloreth said:
....apart from the fact that this is the tax rate that the contractors working in my team pay..........but you know I'm sure you know best.

They are breaking the law and will get ****ed if/when HMRC come knocking.

Electroshadow · 23 Jul 2015 at 13:21

at the end of the day you have to look after numero uno and that all there is too it really.... (contractors aren't your friend, and employers aren't contractors friends

)

I stopped my ltd company around 6 years ago too much hassle paper wise and went Umbrella after they changed the rules.
Umbrella is a lot easier and quite efficient now with the new rule set, and anyone working ltd (working through a client) its probably easier due to lack of I35 and there is no time limit on working through one client.

Plus you can nearly claim as much. the only hurdle is getting your umbrella employer to agree that you needed it or was a work expense then it doesn't come back too you.
its been hassle free now for years

Electroshadow · 23 Jul 2015 at 13:24

Aloreth said:
Hahaha apart from the slight issue that I would have to quit my current job and then find a job working for a different company (my company won't hire someone on a limited company basis who has worked as an employee in the last 6 months).

On a side note, on of the guys has been contracting here for 6 years.......I have no idea how thats acceptable.

maybe he's umbrella ltd rather than ltd company, in which case he's fine as there is no time limit.....

Django x2 · 23 Jul 2015 at 16:57

alx said:
Guessing you're refering to the dividend tax changes? It's a potential game changer for some, although I've seen contradicting figures on how much it will increase tax bills. Bith quotes below are from the same article:

"Indeed, initial calculations indicate that, excluding salary and reliefs like lower corporation tax and a higher tax-free allowance, an extra £6,679 in tax will be due on a £50,000 dividend."

"He calculates that, when combined with the removal of the NIC Employment Allowance (EA), contractors will be £1,062 and £3,164 worse off, on a £50k and £150k dividend respectively."

Which one is right lol.

The more worrying issue looks like the consultation on Supervision, Direction and Control and the ability to get tax relief on expenses.

Yep, it's defo made up my mind about the Mrs returning to work. She'll be employed by me as a director. WIN

MrMoonX · 23 Jul 2015 at 19:14

So many locum social workers getting screwed by IR35 at the moment, due to having a single client and direct supervision from a manager.also the dividend changes will kill off the profit, as many paying themselves under threshold and taking a dividend to earn decent money and pay **** all tax. Does irk us permanent employees

D.P. · 23 Jul 2015 at 19:40

Hikari Kisugi said:
Accounting costs are tax deductible for a start, but most of what you are soeaking about is gubbins in relation to taxation. It is more related to why an hourly rate or a daily rate has to be higher for a contractor, than it should be for a paye member of staff.
There is nothing to suggest this chnage in rate some come from lack of tax paid, it should come from what the persons limited comoany are charging for their sevices in the first place.

The rate changes on dividends is a good way to shore things up somewhat, good on Osbourne, saves chasing the 600000 one man companies, when you can chnage their effective rate to bring them more into line.

Oh, I agree entirely. i got the impression form the OP that he wanted to start his own company and avoid PAYE simply to save some tax.

I see this all the time, people finding out a contractor in the company gets paid Xhundred a day while they barely make that in a week, and then thinking of all the possible tax savings. They never consider the fact that they wont earn that rate when unemployed, or on vacation, or recovering form illness

Dirk Diggler · 23 Jul 2015 at 19:51

D.P. said:
Oh, I agree entirely. i got the impression form the OP that he wanted to start his own company and avoid PAYE simply to save some tax.

I see this all the time, people finding out a contractor in the company gets paid Xhundred a day while they barely make that in a week, and then thinking of all the possible tax savings. They never consider the fact that they wont earn that rate when unemployed, or on vacation, or recovering form illness

It clearly wasn't what I said in the OP.

Samueltastic · 2 Aug 2015 at 21:18

Does anyone know if I can set up a limited company and just keep it and not trade under it? As I want to go contracting eventually (I'm a sparky) as I know some guys around here are on £18 odd an hour which is £5 more than me on the books. Ive just moved to the area so was going to stay on the books for 6 months more but if something arises I want to be able to go as the Ltmd is already set up.

fendi · 2 Aug 2015 at 21:46

when you file your accounts which you can do online you can say it is dormant and not trading.

Dirk Diggler · 2 Aug 2015 at 21:46

Samueltastic said:
Does anyone know if I can set up a limited company and just keep it and not trade under it? As I want to go contracting eventually (I'm a sparky) as I know some guys around here are on £18 odd an hour which is £5 more than me on the books. Ive just moved to the area so was going to stay on the books for 6 months more but if something arises I want to be able to go as the Ltmd is already set up.

You are in the exact same position as me (even the same trade).

I set my Ltd up last week using Quick Formations. Like you, I have a regular job and I intend to make a transition to working limited and eventually for myself. I reckon I'll be better placed to see the direction I'm going in this time next year, and if it's not limited I'll just dissolve the company.

Obviously I'll need to get an accountant involved, but so what? It'll cost a couple of hundred quid at worst. Nothing ventured, nothing gained.

Samueltastic · 2 Aug 2015 at 22:03

fendi said:
when you file your accounts which you can do online you can say it is dormant and not trading.

Thanks

String said:
You are in the exact same position as me (even the same trade).

I set my Ltd up last week using Quick Formations. Like you, I have a regular job and I intend to make a transition to working limited and eventually for myself. I reckon I'll be better placed to see the direction I'm going in this time next year, and if it's not limited I'll just dissolve the company.

Obviously I'll need to get an accountant involved, but so what? It'll cost a couple of hundred quid at worst. Nothing ventured, nothing gained.

Which package did you choose? there seems to be quite a few on there?

Dirk Diggler · 2 Aug 2015 at 22:17

Samueltastic said:
Thanks

Which package did you choose? there seems to be quite a few on there?

Quick Standard.

Made the wife secretary, me sole director with 10 shares (in case I need to distribute shares in future, although unlikely).

Dirk Diggler · 8 Aug 2015 at 10:55

I'm looking for liability insurance. What level of cover do you require for public liability? I think offshore it's £5M public and £10M employers, but I'm unsure what the requirement is onshore?

Recommendations of good companies to use would be welcomed. :cool:

v0n · 8 Aug 2015 at 12:02

String said:
I'm looking for liability insurance. What level of cover do you require for public liability? I think offshore it's £5M public and £10M employers, but I'm unsure what the requirement is onshore?

Recommendations of good companies to use would be welcomed.

It's usually £2m or £5m for public and products liability, difference between the two is usually within £15 and total sum is way below £100 a year.

Dirk Diggler · 13 Jun 2016 at 11:10

It's accounts time soon!

I assume that after the anniversary of start up, I should submit accounts? I've never invoiced through the company as instead of my current employer laying me off as expected last year, they promoted me. For this reason I only ever spent money via the company, for training courses and tools & equipment. I didn't actually trade with any customers, but I do still want to keep the company going for at least another year.

Would a simple letter to the taxman detailing my losses be enough, or should I really go through an accountant?