Sole Trader vs LTD for Future Accounting

[Kelvin]

Hi all,

So I recently (early July) signed a 3 month part time contract with a start-up for a monthly income with a specific hourly rate, as I have been out of work for a long period of time and just wanting to get back into work as soon as possible I naively didn't get the contract professionally reviewed in order to determine IR35 status.

In my mind I considered outside due to the lack of benefits, self insurance etc. (Yes I know poor diligence on my behalf)

In May earlier this year I also setup my own LTD (for similar work) and I was researching for the best ways to pay myself and find the most tax efficient saving methods where possible, I now encounter this dilemma, that even if this contract gets extended for a full year the annual turnover is very low compared to standard IT contracts, so low that getting an accountant might eat into my profits.

Questions now are:


I'm happy with the work, should I still get contract reviewed for IR35 status?

What steps would I need to take in order to switch into working as a sole trader rather than LTD?

When sending for invoice can I send my LTD details or should I just send a personal account for now? (Contract is with my personal details)


Thank you all for reading appreciate all the help!

 

[Ziggy2024]

If the contract is with you personally and not in the name of the ltd company then you have no need to worry about IR35. Just send an invoice from you personally.

Are you registered for self assessment?

 

[Kelvin]

If the contract is with you personally and not in the name of the ltd company then you have no need to worry about IR35. Just send an invoice from you personally.

Are you registered for self assessment?

Hi, no not registered for self assessment

 

[GLAbusiness]

You might wan to look at https://www.gov.uk/guidance/check-employment-status-for-tax

 

[Bobbo]

1. If it is your personal name and you don't intend to change that then maybe no need. If you intend to interpose an intermediary between yourself and the startup then yes, probably.

2. Congratulations, as the contract is between you personally and the start up "(Contract is with my personal details)", you are already a sole trader. This contract from what you've said has nothing to do with the company you've set up.

3. You could request payment to a company bank account but that does not change the fact that, as the contract is between you and the startup, amounts due under the contract would be taxable on you personally regardless of where you request payment be directed.

 

[Kelvin]

1. If it is your personal name and you don't intend to change that then maybe no need. If you intend to interpose an intermediary between yourself and the startup then yes, probably.

2. Congratulations, as the contract is between you personally and the start up "(Contract is with my personal details)", you are already a sole trader. This contract from what you've said has nothing to do with the company you've set up.

3. You could request payment to a company bank account but that does not change the fact that, as the contract is between you and the startup, amounts due under the contract would be taxable on you personally regardless of where you request payment be directed.

Thank you for this detailed answer.

Would I still need business insurance from a sole trader aspect in this case? I prematurely signed up.

Would I need to get an accountant? I don't think I do but wanted to double check

 

[MyAccountantOnline]

Thank you for this detailed answer.

Would I still need business insurance from a sole trader aspect in this case? I prematurely signed up.

Would I need to get an accountant? I don't think I do but wanted to double check

I'm no insurance expert but I'd definitely check contractors insurance - look at public and professional indemnity insurance.

Do you need an accountant - can you deal with all that's required and ensure you pay no more in tax than is legally required?