Simple Things Contractors Should think Prior to Going Limited Company
If you are a contract or self-employed employee bearing in mind operating through your own Limited Company, it’s essential that you read this article before you do anything. Setting up a Limited company is a big contract and some contractors get it all incorrect since they dive into its previous to really sympathetic the stuff involved.
IR35 rules as a contract or freelance employee you’ve approximately surely heard of this legislation; whether you identify how it applies to you, is one more thing.
Effectively IR35 is there to prevent every tom dick and hassle from setting up a company and benefiting from the tax compensation it can present. There are some rules which can help decide whether you can, or cannot reap the plunder of taking dividend from your company .The three main fundamentals are manage, right of replacement and mutuality of obligation.
Manage: Firstly, if you land a contract and you fall under the control of a manager to the point where they can move you from job to job and say when you require to be in by, you have lack of control over your work, thus could be seen to be working more like a usual employee rather than a business in its own correct.
Right of substitution: If you fell ill at the same time as contracting, could you get a coworker or business connect to total the job in your absence? If no, you could be seen extra as an employee rather than somebody operating there is own commerce.
Mutuality of obligation: Is your client obligated to find you an incessant stream of work? If yes, then you would be classed as an employee. If you are in service your own business you should be working on a project foundation and your customer should not be compelled to find you more work once you total that project.
There are some secondary elements which you can read up on here:
Note Only one of the above elements need to missing for you to fall outside of IR35 (i.e. not applying to you). If you are definitely caught by IR35 then maybe setting up a limited company is not the best route for you. I would recommend looking into an umbrella company as a close option.
Anticipation of future work setting up and running through your own Limited Company requires you to think about whether you see yourself working on future assignments and for how long. If you anticipate going back into permanent work after a 3 month contract, I wouldn’t recommend setting up a Limited Company. Set up a Company should be for the long period not just a short period attach.
Expert Contractor Accountants
There are a number of expert accountants especially for contractors. Life form an ex-contractor for myself I would advise who is one of the more reputable dense out there. They will take care of all your clerical, accounting relationships and any management; which no one needs to do.
Processing your request, Please wait....
