Going self employed (I think)

jchiver · 15 Dec 2006 at 13:26

I am thinking about going self employed setting up my own LTD and selling my services.

I have been in IT for about 8 years doing just about anything but my main skills our MS. I have a MCSE (Does not mean much). I work for a company that sells IT Solutions and they pimp me out at about £1000 a day to install servers, upgrade OS and AD's etc.

Just asking has anyone here gone self employed and if so how did they find the change. Did they get a contract before resigning from there current jobs or resign first?

How do you find it now? Is it more money? is it a better life?

any info would be appreciated.

Thanks

m00ch0 · 15 Dec 2006 at 15:36

from what your saying my dad did the same type of thing but with software engineering more money was in it for him but also more stress and hours i also think he had some contacts around places for jobs to keep him going!

Stolly · 15 Dec 2006 at 15:39

jchiver said:
I am thinking about going self employed setting up my own LTD and selling my services.

I have been in IT for about 8 years doing just about anything but my main skills our MS. I have a MCSE (Does not mean much). I work for a company that sells IT Solutions and they pimp me out at about £1000 a day to install servers, upgrade OS and AD's etc.

Just asking has anyone here gone self employed and if so how did they find the change. Did they get a contract before resigning from there current jobs or resign first?

How do you find it now? Is it more money? is it a better life?

any info would be appreciated.

Thanks

When you leave, can i have your old job ?

photoshop · 15 Dec 2006 at 15:48

jchiver said:
Just asking has anyone here gone self employed and if so how did they find the change. Did they get a contract before resigning from there current jobs or resign first?

How do you find it now? Is it more money? is it a better life?

I went self employed 3 months ago and i have i like it a lot. The money is piling up. Certainly dont have to worry about getting paid monthly as i get paid weekly. I make a week now what i use to make a month.

I found a position and then handed my notice in. I would certainly suggestion this route as you dont know when you will find a contract position for sure.

Quality of life is around the same as it was when i was PAYE. I spend more time now commuting which i didnt before and to be honest with you im not bothered as the benefits of all the xtra money outway the travelling.

The only downside is not knowing how long you are going to be in a job and if and when the next position pops up and where.....

PS i pay less tax and NI now also and my expenses are free from tax meaning more money in my pocket rather than Brown's

furnace · 15 Dec 2006 at 16:16

How much do you pay accountants?
Are they good - do they make it so you pay as little tax as legally possible?
Did the accountant set up the company for you?
Did you register your home as the registered address of the company?

Quick burst of questions there, I'm setting up in Feb-ish ya see

I'm on the hunt for a business partner but it looks like I'll be doing it alone

Oh, also - trade insurance... can you get that? Or do you have to be part of the car trade? I heard it's ridiculously cheap in comparison to "retail" insurance.
You get tax back on petrol, too?
If so, is it just the VAT you get back , or the petrol tax too?

Haha, thanks in advance for answering those

themistry · 15 Dec 2006 at 16:25

photoshop said:
PS i pay less tax and NI now also and my expenses are free from tax meaning more money in my pocket rather than Brown's

What is your means of doing this? My (limited) understanding of IR35 tax laws show this not to be the case. Please do tell, maybe I can do the same

Thanks.

TM

flump · 15 Dec 2006 at 16:40

themistry said:
What is your means of doing this? My (limited) understanding of IR35 tax laws show this not to be the case. Please do tell, maybe I can do the same

Thanks.

TM

That will be an umberella company. They get you IR35 compliant contracts, do your accounts and allow claiming expeneses. I used to use Giant , got paid weekly, minimum wage + weekly dividends and expenses offset. I would recommend them.

basmic · 15 Dec 2006 at 16:43

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SB118 · 15 Dec 2006 at 16:53

^^^ wtf?

basmic · 15 Dec 2006 at 16:55

SB118 said:
^^^ wtf?

Think I jumped the gun there.

Oh well, at least they know now.

Andr3w · 15 Dec 2006 at 17:05

basmic said:
Think I jumped the gun there.

Oh well, at least they know now.

noob

themistry · 21 Dec 2006 at 22:29

flump said:
That will be an umberella company. They get you IR35 compliant contracts, do your accounts and allow claiming expeneses. I used to use Giant , got paid weekly, minimum wage + weekly dividends and expenses offset. I would recommend them.

Hey flump, you may want to start reading up on this. As of April 2007 the law is changing effectively making the way Giant and other umberella's work illegal, i.e. the way they work around IR35 (when infact you are caught by it), allowing you to expense in travela and subsidence (£15 per day?) etc without reciepts (of which the latter is already illegal, however they still let you do it).

I'd advise you to head over to http://www.contractoruk.com to read up on it. Watch out for the forums, full of over opinionated so-and-sos, but they know there stuff. Burying your head in the sand is not an excuse!

Alas, just to let you know that the law is changing soon.

TM

photoshop · 21 Dec 2006 at 23:18

flump said:
That will be an umberella company. They get you IR35 compliant contracts, do your accounts and allow claiming expeneses. I used to use Giant , got paid weekly, minimum wage + weekly dividends and expenses offset. I would recommend them.

The man speaks the truth. I use Giant also and not had any probs with them!
But there have been changes which will come in affect in 6/04/2007. Basically brown is clamping down on umbrella/composite companys. Time will tell.

photoshop · 21 Dec 2006 at 23:26

themistry said:
Hey flump, you may want to start reading up on this. As of April 2007 the law is changing effectively making the way Giant and other umberella's work illegal, i.e. the way they work around IR35 (when infact you are caught by it), allowing you to expense in travela and subsidence (£15 per day?) etc without reciepts (of which the latter is already illegal, however they still let you do it).

I'd advise you to head over to http://www.contractoruk.com to read up on it. Watch out for the forums, full of over opinionated so-and-sos, but they know there stuff. Burying your head in the sand is not an excuse!

Alas, just to let you know that the law is changing soon.

TM

Personal Service Companys (PSC's) will not be affected by the new legislation. And i think firms like Brookson, Giant and a whole load of others will be amending the service they offer to stay "legal".

Brown cant totally eradicate the "problem" because the temp worker market is a big market and it is healthy for the economy and business.

Here is the newsletter i got from Giant:

Date: 18/12/2006

FAQ's - answers at a glance

Budget update: tackling managed service companies

We have now had the opportunity to study in detail the document "Tackling Managed Service Companies" issued by HM Treasury/HMRC on 6th December 2006. A number of points are, in our opinion, clear.

Can you provide an overview of the proposed legislation?
# On the positive side HMRC recognise that genuine contractors, in business on their own account and bearing all the risks attached, should also be entitled to the benefits (eg. dividends).
# HMRC view managed service companies ("MSC's") "almost invariably" as a vehicle for disguised employment whereas Personal Service Companies ("PSC's") are not.
# HMRC do not regard enforcing the IR35 legislation on MSC's as a realistic option. This is because of the growing large number of workers, the resource intensive nature of the legislative tests and the likely inability to recover funds from MSC's in any event.
# While not making MSC's illegal the draft legislation will make them very unattractive to contractors (even if genuinely operating outside IR35), agencies, end clients and the providers of MSC's.
# Although there is a consultation period (less than 3 months) the forthright tone of the document makes it clear any changes will only be around both the definitions and, any unintended consequences to ensure the legislation is well targeted and robust. The Document even states "the Government would therefore welcome views on whether the legislation could be strengthened further and, if so, how."

What is a managed service company (MSC)?
# Quoting directly from the Treasury FAQ's ".....In the draft legislation 'MSC' includes both 'composites' and 'managed personal service companies'...."
# However, although the review is directed at IR35 non-compliance by MSC's, there is some debate, because of the wording of the actual proposed legislation, that umbrella companies may also be caught by the definition of an MSC.

Why has new legislation been proposed?
# HMRC has always recognised how MSC's were structured and operated but often-reminded operators that IR35 must be applied by them - HMRC bulletins 60 (August 2004) and 74 (December 2004)
# Unfortunately it appears that many unscrupulous operators did not consider IR35 and paid all their workers a dividend regardless of the IR35 legislation.
# HMRC were further frustrated because often they could not recover the unpaid taxes because the operator 'closed' the MSC's and there were no assets left to pay HMRC what they were due. (Some operators apparently set up again almost immediately and started trading again)

What is the proposed new legislation?
# MSC's can still operate but apart from certain expenses all income will now be subject to full PAYE taxes - so there will no benefit in paying a dividend and no benefit in operating as an MSC.
# 'Home to work' travel, as opposed to 'site to site' travel, will not be an allowable expense for an MSC. Again, there is some debate as to whether this also affects umbrella companies.
# Additionally if full taxes were not being paid to HMRC in accordance with the new legislation then HMRC will have new powers to recover any debt from associated 3rd parties. Obviously in the first instance this is the MSC operator but could be extended to other parties who have benefited.

What is the effect on:
# MSC's: under this revised tax legislation there would be no justification to operate MSC's.
# Umbrella: there is a debate, because of the wording of the actual proposed legislation, as to whether umbrella workers will still receive the benefit of 'home to work' travel.
# Personal Service Companies (PSC's): these are unaffected by the legislation and IR35 still applies to them.

How will it affect:
# Temporary workers: they will choose between operating under agency paye, an umbrella company or their own PSC.
# Recruitment agencies: agencies will want to ensure they are not engaging with an MSC operator who is paying dividends because of the debt transfer legislation.

When is the proposed legislation to be effective from?
# 6th April 2007

Is there a consultation period?
# Yes until the 2nd March 2007.

Giants view
# Unfortunately non-compliance to the IR35 regulations by some unscrupulous MSC operators affects all of the industry, and we can understand HMRC's frustrations especially when they have had issues recovering the unpaid taxes.
# Giant has, since 1992, provided compliant services via its PSC, umbrella and MSC options. The decision on whether workers could receive dividends via its MSC service is always taken by Qdos, an independent 3rd party, on an assignment-by-assignment basis. Those who Qdos did not accept for the IR35 insurance and were therefore not eligible for a dividend joined either giant's umbrella or PSC's solutions.

What happens next?
# Nothing changes until 6th April so we will continue to offer our existing compliant and quality services in the short term.
# Going forward giant will be offering a revised PSC service together with its existing umbrella service.
# In the meantime workers should continue operating as they are and await clarification of some of the legislation before deciding suitable action, if required.
# The current giant powerhouse service will not be available after the end of the current tax year, i.e. 5th April 2007.
# There will be changes to the way we provide our services (as a result of the legislation) but we will aim to minimise the impact on both contractors and agencies.

KEY POINTS for temp/contractors:

# Going forward giant will be offering a revised PSC service together with its existing umbrella service.
# In the meantime workers should continue operating as they are and await clarification of some of the legislation before deciding suitable action, if required.
# The current giant powerhouse service will not be available after the end of the current tax year, i.e. 5th April 2007.
# There will be changes to the way we provide our services (as a result of the legislation) but we will aim to minimise the impact on both contractors and agencies.

Im sure firms and agencys will find a way to get around it. I think tax relief on expenses and subsistance might be thrown out though