I guess I am one of the guys Stuart said would be along in a minute
Stuart very close - IR35 in fact
Again, if you working almost exclusively for one company then some of the tax advantages and protections you can benefit from as a limited company will be lost. [The dreaded IR45 rules if I remember correctly, anyone?]
Info so far posted is helpful - can I summarise it like this:
OPTION 1 SOLE TRADER
Tax and NI is payable on profits - ie income less allowable expenses. You have to put your tax aside to be paid in two lump sum instalments in January and July (bit more complex than that but on an ongoing basis that is roughly what happens)
OPTION 2 OWN LIMITED COMPANY
Tax and NI is payable on profits - ie income less allowable expenses, but NI saving available by paying a small salary and balance as dividends
A limited company will generally give you a better net income than a sole trader, even after slightly higher accountancy fees. :!:
OPTION 3 OWN LIMITED COMPANY ADMINISTERED BY AN ACCOUNTANT - generally referred to as a "managed company".
THIS WILL GIVE YOU SLIGHTLY LOWER INCOME BUT NONE OF THE HASSLE OF ADMINISTERING THE COMPANY
OPTION 4 USE AN UMBRELLA COMPANY
An umbrella company effectively employs you and you also have a share in the company - company invoices the company you work for - you are paid a small salary, expenses and dividends. Tax is deducted on your income each week/month.
TYPICALLY AN UMBRELLA COMPANY WILL GIVE A SIMILAR NET INCOME TO BEING A SOLE TRADER BUT MEANS YOUR TAX IS PAID AS YOU GO AND YOU HAVE NO RESPONSIBILITY FOR ACCOUNTING/ADMINSITERING YOUR OWN BUSINESS.
For a fun look at sole trader versus limited company, take a look at this Business Link Website
http://www.businesslinksolutions.co.uk/downloads/seminars.asp?mid=5
and select the Jaffaland presentation - this is an animated version of presentation I do - hope you like it! You will need to register with business link but that is no bad thing - there's some good info available on thier site anyway.
If you want to call me I can talk you through the options in a few minutes and recommend a logical way forward.
If you send a PM with your email, I can also send a summary sheet with graphs showing the different net income as a sole trader or limited company.
It sounds to me as though the nature of the work you will do will fall outside of IR35 even though you will be working for one company almost exclusively. I could also give you some guidance on the wording of a contract for your services.
Hope the above is helpful
Regards
Graham
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