Stay paye or go self employed?

[i=p/u]

if i dont have UTR will i get charged at higher rate of tax(emerg) till i get UTR.... im just going to get an accounntant, iver heard £100-£150 a year......

as for national insurance, im led to believe they will post me slips which i will pay at post office monthly..

if i get work for myself on the side, how do i go about this, i.e ive priced for attic conversion where i will earn more in 2 days there than i will for a company...

 

[Spazz]

As soon as you register as S/E you get a UTR.

They post slips every 3 months and you pay them in the post office or you can go down the Direct Debit route

It is illegal not to declare work that you do and get paid for - however we all do it
If I got the wrong end of the stick - you need to make note of it and keep a record of how much you do and then when you do your SA (Self Assessment) you fill it in accordingly.


Dont get confused between company and business
Company = limited = employed as a director
Business = sole trader/Partnership = all profit belongs to the owner(s) of the company

 

[Spazz]

You only get charged a higher rate of tax when you tick 'I have another job' on the P46

 

[i=p/u]

but being self employed , you could be working for different dudes all the time.

so its really one big job but under differnt people..

say i wanted to go get niceic for my own work would this be counted as 2nd job??? as it myself or just pay 20% . do i bill myself ha

 

[Spazz]

If you are NIEIC then it belongs to you!

You can get NICEIC for a company as well, but if you get it for a business then its you unless you employ a sparky and its based on them.


What I am doing is registering it in my name, same as the insurance (as I am a sole trader) it makes no difference to my customers but it means that I am covered even if I do work outside of the business, even though any business is only a trading name of a person and not a company.

Dont forget a business is a single person or partnership (more than 1 person) and a company is not connected to anyone at all - hence why a company can be in thousands of pounds of debt and when they dissolve, so does the debt, as it does not belong to anyone - hence no protection if a company owes you money and they dissolve

 

[tombrooker84]

I'm no accountant, but I was under the impression that it was worth setting up a limited company if your earning over 50k a year, due to the fact that after 50k you pay less tax than you would as a sole trader due to the company tax being only 20%. Also there is the added benefit of limited liability?

 

[Spazz]

That is true yes - but that income cant be used as your wages then, you will have a set amount that you can take out (as your wage) and the rest belongs to the company.


A Limited company is great if you or a partner (business or personal) has loads of debt


Situation that my nabour is in now:
She is in loads of debt so the bank has just reprocessed her flats (5 in total). If she had made the business (of renting flats) a company (which has now been done with the other 3 flats in the block owned by different people) the bank cant reprocess them.

Only problem is if the company is in trouble is based at your house you have to prove who bought the house so that does not get reprocessed.


Setting up a company is also great if the director does not have much credit score as when s/he sets up a limited company the credit score is mid way - allowing borrowing and credit, but some companies/businesses (like myself) wont give credit to companies unless they have been running for at least 2 years and have a very good credit score.


Have a chat with a personal adviser about it.


You can always set up as S/E then change into a company - just write to all your creditors (people you have accounts with) explaining why your changing from a sole trader to a company and they should be happy to change the account over as you have a good reputation with them already that you have built up

 

[i=p/u]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

 

[Spazz]

And dont forget if you set up a limited company then you dont need to register as S/E because you are not S/E, you are employed by the company! - therefore an employee - but the employer if you have people on the books.

The company is the employer for you, and has to be registered as an employer and file your PAYE regular as if you would if you employ someone

 

[Spazz]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

Exactly!

If you set up as a limited company and the company gets NICEIC then you cant use that yourself unless the company is contracting you out - the HMRC will want to see you charging for this - even if its family



If you are S/E and get NICEIC its yours! and you contract yourself out to your customers - could even be family - family you wont have to charge as HMRC dont have access to your EICs or PIRs

 

[Spazz]

No difference at all.

Excuse me from asking:
Are you in any debt?

If the answer is - how much would depend on if you want to go as a sole trader or company

If a debt collector comes after you for debt and your Self Employed (sole trader) then they can take all the business stuff off you as well

If you set up a company and the company owns the equipment (even your house) the debt collector can not take any of them (just make sure you have documents to prove it)

Same if you pay maintenance - If you are a sole trader - the maintenance will look at the business accounts and take that into account (same if you divorce)
With a company they cant look into them at all - so not effected with divorce or maintenance


So personal debt, maintenance, going through a divorce (or risk of it) or very high turnover (above the threshold (£100,000 at current) are all good reasons to set up a limited company

 

[i=p/u]

as you say speak to an advisor of some sort.. but thanks for the info to now..

 

[Spazz]

Also check out here

This is the tax rates you pay - if your going to come into the lower rate (only profit is counted) and dont have any of the above issues then you might as well be a sole trader

If your going to be in the higher rate (profit only) and/or have any of the above issues then a limited company is the best option for you




Bed time now for me

 

[alarm man]

i feel the need for a drink all of a sudden..

 

[i=p/u]

thanks nicholas, i am going to go self employed for now as thats where i can get work .... bar the odd we job here and there... im growing like shetland pony everyday


alarm man no alcahol, nice fresh the marra, smell good