stevie_b Posted February 20, 2019 Share Posted February 20, 2019 I'm about to become a sole contractor for the first time. Does anyone have any recommendation about how to handle the admin side of things? e.g. do you use an umbrella company to handle NIC, payroll, IR35, etc? Any tips on how to set up payments so they're as tax efficient as possible? Quote Link to comment Share on other sites More sharing options...
Noz Posted February 21, 2019 Share Posted February 21, 2019 Use something to track daily spend like QuickBooks. But just keep on top of it daily. Whateber you do. Depending on what you do. It can be a right pain catching up. When I was doing the lights I had a huge amount of tiny purchases and it became a task in itself. I found keeping on top of finances daily saved a huge amount of time. As it was always fresh in my mind and I didn't have to set aside time to figure out the purchases. People always say a good accountant pays for itself. In think that's true. They can do your books for you or most offer training services. If I could turn back the clock I would have gone limited to begin with over some trader. Liability always worried me. Plus easier to offset tax. Quote Link to comment Share on other sites More sharing options...
jamesmark Posted February 21, 2019 Share Posted February 21, 2019 I am going to be doing the exact same shortly, become a IT Contractor. But I am going to go down the LTD company route rather than Umbrella company. Contractors that have been in the game for years all say LTD company for better Tax savings. Also, just get a good accountant to handle everything, so that leaves you to concentrate on getting a contract and earning. Quote Link to comment Share on other sites More sharing options...
nolizma Posted February 21, 2019 Share Posted February 21, 2019 I only started 6 months ago being a complete noob but after some research and asking around I decided to go with a ltd rather than umbrella and have an accountant i'm happy with so far. They have an app so you can track everything. All I have to do is log in my expenses, invoices, and bank transactions. Good luck! Quote Link to comment Share on other sites More sharing options...
stevie_b Posted February 22, 2019 Author Share Posted February 22, 2019 Going ltd sounds easier than I was expecting. Thanks guys. - - - Updated - - - Going ltd sounds easier than I was expecting. Thanks guys. Quote Link to comment Share on other sites More sharing options...
rider Posted February 22, 2019 Share Posted February 22, 2019 (edited) The only reason to go for limited over sole trader is to do what it says, to limit any liabilities to the company rather than to you. Though as a private limited company if you do things like take out bank or finance loans then those will always be assigned to you personally as guarantor. So forming a limited company just protects you from non secured creditors that includes the likes of HMRC for any PAYE or VAT or Corporation tax unpaid dues. It also protects you if you are sued successfully through court for any reason. There are disadvantages to going limited rather than sole trader. You'll find that when you talk to accountants. They will charge up to 3 times the amount to prepare the accounts to file with companies house for a limited company than they would for personal sole trader accounts that will be used to determine any tax liabilities. Accountants tend to charge based upon the amount of work you do so if you are the kind of person that turns up with a shopping bag full of invoices and receipts expect to pay over £2k. If you are tidy and use a good accounting software package then I only pay £600 for my limited company accounts which is cheap. As for payroll, your accountant will be happy to do that. Don't go to umbrella companies. Or you could do you own. There are lots of payroll software providers who offer free or very low cost PAYE options for sole traders. We use Brightpay and their software is so easy and customer support thorough you could do it yourself and probably save £300 a year over having the accountant do it for you. If £300 is pocket change to you then just ask the accountant to do it. Foot note: As a foot note you'll have legal requirements for filing and insurance cover and these are more onerous and in the case of insurance the cover is more expensive for limited companies than sole traders. HMRC rather like hitting limited companies with pretty hefty fines which start off hefty and double up on each subsequent occurrence if you miss filing dates. Which is another very good reason to sub contract payroll and tax filing to your accountant particularly if you are the easily distracted or forgetful type who could overlook any report or form filing requirements. Edited February 22, 2019 by rider (see edit history) Quote Link to comment Share on other sites More sharing options...
jamesmark Posted February 22, 2019 Share Posted February 22, 2019 Ha, well what a turn up for the books. Where I was considering going contracting when my mums estate was wound up and paid out. I got wind of a contract couple of days ago and have put my notice in today. Bricking it, but the daily rate is too much to ignore. Issue now is if my current job can release me in 2 weeks. If not I am staying where I am. Quote Link to comment Share on other sites More sharing options...
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