Self employment advice sought :)

[User6179]

It was a humorous reply

Humour has no place on CC, kindly keep it to yourself!!

 

[vickster]

Let me know if you need a referral for the insurance

 

[Salar]

Changed 10 years ago.

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

Interesting ( I set up 22 years ago!).

 

[JhnBssll]

Let me know if you need a referral for the insurance

I will do, much obliged!

So far it sounds relatively straight forward;

Register as self employed with HMRC
Take out relevant indemnity insurance
Hold back a percentage of whatever I earn (50%?) in a seperate account for end of year tax payment
Complete a self assessment
Pay tax

Now i just need to find out how much work they've got for me and decide how to structure it - I suspect some form of retainer could be useful, maybe if I charge them for ~5hrs a week on a classic retainer on the proviso that I'm unable to do more than, say, 10hrs a week in a crisis due to other commitments... Again it all depends on the estimated workload I guess.

What are the standard payment terms you would accept? 30 days from invoice? 60 days? I guess I would invoice at the end of each month?

 

[Salar]

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?

You'll need P.I. for design work. The companies you work for will more than likely request to see a copy.
You can set your own terms of payment. Mine are 14 days, but I normally leave it until 30 days before I start chasing.

Also prepare a terms and conditions document. When I take on new clients I request that they sign it and acknowledge the terms.

 

[alicat]

Definitely get professional indemnity insurance. You/any company you set up are providing a service and you/it can be sued if something goes wrong.

 

[accountantpete]

You can either go self-employed or form a limited company.

SE is a lot easier but you need to know what income to declare (relatively straightforward) and what expenses to offset against this income (not so easy). I would advise you contact a local accountant as if you make a mistake by say over declaring expenses then a large liability can arise if it is repeated over a number of years. On the other hand if you don't claim all the available expenses you end up paying too much tax.

Forming a limited company really needs professional help - the main attraction is that you can pay yourself a Dividend rather than wages at reduced rate of tax.

I'd have a chat to a local accountant to run through the two options in more detail.

 

[midlife]

All my colleagues at work who do private work on top of their NHS contract have accountants to sort it out.

 

[Slick]

Interesting ( I set up 22 years ago!).

I wasn't far behind at just over 18 years ago. I really needed the protection it offered but as you already know, it can be tricky to get money out efficiently.

 

[fossyant]

Just keep records of anything you pay out for in this extra job. You can fill a self assessment in on-line - it's not hard. Just remember to keep half of the money back to pay the tax and ni.

 

[vickster]

I will do, much obliged!

So far it sounds relatively straight forward;

Register as self employed with HMRC
Take out relevant indemnity insurance
Hold back a percentage of whatever I earn (50%?) in a seperate account for end of year tax payment
Complete a self assessment
Pay tax

Now i just need to find out how much work they've got for me and decide how to structure it - I suspect some form of retainer could be useful, maybe if I charge them for ~5hrs a week on a classic retainer on the proviso that I'm unable to do more than, say, 10hrs a week in a crisis due to other commitments... Again it all depends on the estimated workload I guess.

What are the standard payment terms you would accept? 30 days from invoice? 60 days? I guess I would invoice at the end of each month?

I pay myself about a third of what I earn a month, dividends as per what the accountant instructs, probably pay around a sixth in pension contributions. I pay HMRC tax and NI every month again as per the payroll from the accountant and a chunk in corporation tax at the end of the year

 

[Slick]

I pay myself about a third of what I earn a month, dividends as per what the accountant instructs, probably pay around a sixth in pension contributions. I pay HMRC tax and NI every month again as per the payroll from the accountant and a chunk in corporation tax at the end of the year

The corporation tax is the tricky bit. Obviously everyone has their own set of circumstances, but unless you require the additional protection the umbrella route can work out more efficient for individuals.

 

[vickster]

The corporation tax is the tricky bit. Obviously everyone has their own set of circumstances, but unless you require the additional protection the umbrella route can work out more efficient for individuals.

I already have an incorporated company. I took the advice of my accountant. Last year CT was around £8k

 

[Slick]

I already have an incorporated company. I took the advice of my accountant. Last year CT was around £8k

I know you have, and I also know that you have taken professional advice which is right and proper. My own experience is that a Ltd company is not the most efficient way to deal with tax unless you really need the protection that it offers. 8k corporation tax seems a bit excessive to me for an individual unless you're profit margins are huge.

 

[smutchin]

What are the standard payment terms you would accept? 30 days from invoice? 60 days? I guess I would invoice at the end of each month?

30 days is normal for me. There was recently a change in the law that entitles you to claim compensation if payment is later than 60 days from invoice. I'm not sure of the exact details but it should all be on the HMRC website.