Self employment advice sought :)

[JhnBssll]

Without going in to too much detail I've been approached to do some consulting work in addition to my day job. I've had it approved by my main employer and they're happy there's no conflict of interest so we're good to go on that front. It's quite interesting work so I'm not really doing it for the money but equally I want to make it worthwhile and want to ensure I don't fall foul of tax rules etc.

I'm already paying higher rate tax on my day job earnings through PAYE. I've quoted an hourly rate to the new company that ensures it's still worthwhile assuming I lose half of it to tax and NI but I have very little clue as to the workings of it all - I've never had to complete a self assesment for example, its always been done through PAYE. How complicated is it and do I need to employ an accountant?

To add to my confusion a few friends have suggested I set up as a limited company What would the benefit of this be?

Currently I'm not even sure how much work there will be - it could be anything from one to ten hours a week and could last a month or years, I simply don't know at this stage.

Since we have people from a vast swathe of backgrounds in one place I figured this would be as good a place as any to start - so what should I do? We must have plenty of self employed people and small business owners on here

Thanks in advance!

 

[JhnBssll]

Get cash, problem solved!

Unfortunately I owe the NHS a stack of money for fixing me up and keeping me alive on a few occasions - I'm one of the weirdo's that likes paying tax When I tried to ask a few mates at my local earlier all I got was methods of cheating the system

 

[DCLane]

Make sure you take your expenses into account; doing self-employed work includes premises (home), running costs, etc. PAYE is fine, you don't need to be a limited company unless you're earning a significant sum.

 

[Yellow Fang]

I've been wondering a bit about this myself. I think it's easier to set up as a sole trader. I think one of the issues is that if you become liable for something, then you can't just declare your company bankrupt, you might have to sell your house. Another issue is that other companies might not take you seriously. They'd just see you as a one man band. I hear it's pretty easy to set up a company, but the paperwork and keeping accounts concerns me.

 

[the snail]

If you are a sole trader it's pretty simple, you can do all the tax stuff online, you need to set up an online account to access the HMRC site, then when you're ready to go you inform them when you starting trading, and submit your tax return online by January after end of tax year. There is plenty of info on the HMRC website. I don't bother with an accountant, just keep all my receipts for expenses, record my takings. Just make sure you keep records as you go, and don't file your return at the last minute. Oh and make sure you keep money set aside to pay the bill.

 

[Slick]

I still have a limited company on the go but wouldn't recommend setting one up for a small additional venture as it does incur another layer of corporation tax that you shouldn't need to pay. Google setting up an umbrella company and you will find all the necessary information on a very efficient system for the self employed. Your attitude towards paying tax is to be commended, but you don't have to give it away.

 

[Levo-Lon]

As above ,I'd talk to an accountant tho , tax is complicated enough with one income
You can then decide wheather or not you need to employ an accountant to save you time ,it is time consuming doing all the forms and working out, especially if the income fluctuates every week.

Hope it goes well, always more enjoyable being paid for something you enjoy

 

[Heltor Chasca]

Have a look at QuickBooks. It’s a ‘good enough’ package to keep your admin tidy when it comes to year end.

 

[vickster]

Maybe @accountantpete can advise

I went freelance about 2.5 years ago, started a Limited Company and been contracting since. Accountant advises me on accounting matters as I'm fairly clueless about it all

I think once you're doing self assessment, you'd need to do for all your earnings maybe? So any other income you have from savings etc. Is there an accountant at work you could talk to?

 

[Salar]

Should you form a limited company, you are not self employed, you are an employee, director of your business.
Sounds odd, you would also need a company secretary.

As Slick says, the umbrella route is interesting.

 

[vickster]

Should you form a limited company, you are not self employed, you are an employee, director of your business.
Sounds odd, you would also need a company secretary.

As Slick says, the umbrella route is interesting.

I don't have a company secretary? I'm the only director, shareholder and employee

 

[Slick]

I don't have a company secretary? I'm the only director, shareholder and employee

Changed 10 years ago.

https://www.informdirect.co.uk/officers/company-secretary-do-i-need-one/

 

[vickster]

Changed 10 years ago.

https://www.informdirect.co.uk/officers/company-secretary-do-i-need-one/

I do my own admin, which is basically invoicing, companies house comms and communicating with the accountant so they can do the important stuff

 

[JhnBssll]

Interesting replies so far, thanks everyone! I'm going to throw something else in that I forgot to mention in my original post; liability. How does this work as a contractor? Would I need to insure against it, or does the buck stop with the company? I will be consulting on mechanical product design topics; in my day job I could potentially be found liable if something I designed were to injure someone, how does this work as a contractor or would it have to be specifically states in a contract?

 

[vickster]

Interesting replies so far, thanks everyone! I'm going to throw something else in that I forgot to mention in my original post; liability. How does this work as a contractor? Would I need to insure against it, or does the buck stop with the company? I will be consulting on mechanical product design topics; in my day job I could potentially be found liable if something I designed were to injure someone, how does this work as a contractor or would it have to be specifically states in a contract?

I have professional indemnity insurance. Costs around £100 a year (business expense). I think I'm insured up to a million quid but I do nothing technical pe se. My contracts require I have it