Can someone work as self-employed for 1 sole trader business?

[Anthony Shepard]

Hello,

If my wife or my friend helped out occasionally in my sole trade business would I be able to pay them as a self-employed contractor even though they do not work for anyone else? Or is there a condition that someone who is self-employed can not only work for 1 business?

 

[Newchodge]

It depends what they are doing and what the working relationship is between you.

 

[Anthony Shepard]

The work is casual and there is no contract in place requiring work to be available.

I understand that there are certain factors that are used to determine whether someone is employed or self-employed and I would say it meets the criteria of self-employed such as they can decide what work to do and they are paid for completing a task rather than a regular salary.

Does that mean someone can act as self-employed and invoice for their services even if they are only choosing to work for one business. In this situation there is nothing stopping them from working for more than one client if they choose to.

 

[KAC]

What does your business do?
Precisely what services will your wife/friend be doing?
How much will you be paying them?

 

[Anthony Shepard]

The business runs IT support. I was intending to pay my wife and potentially also a friend a commission whenever they help to find a customer. I was also thinking that my wife may be able to help with some general admin work. I am not sure yet exactly how much as it may depend on how much sales they help generate.

I am torn because it seems that they fit many of the factors that suggest they would be self-employed such as they can decide what work to do and when, they use their own computer and there is an agreed fixed price for their work.

But on the other hand I am not sure they can claim to be self-employed if they are only working for me and perhaps don't have a true business:

HMRC specify on their website:
As a general rule, a worker is:

• employed if they work for you and don’t have the risks of running a business
• self-employed if they’re in business on their own account and are responsible for the success or failure of their business

 

[KAC]

You could probably get away with paying your friend if he/she believes they are working on a self employed basis, are paid purely a commission on finding a customer, they invoice you on that basis and meet all of their own expenses.
So far as your wife is concerned, is there a reason that you don't wish to treat her as an employee? Think it would be hard to show that she were self employed on the information given

 

[Anthony Shepard]

Thank you. It is unlikely that my wife's pay will go above the LEL threshold anyway so it makes sense to put her on a payroll.

 

[Newchodge]

Thank you. It is unlikely that my wife's pay will go above the LEL threshold anyway so it makes sense to put her on a payroll.

Does she have any other PAYE income?

 

[Anthony Shepard]

No, she has no other source of income.

 

[Newchodge]

No, she has no other source of income.

In that case, if you pay her less than £113 per week, when she is working, not on average over the year, AND you don't pay yourself through payroll, then you don't have to set up a payroll or send RTI returns or set up an auto-enrolment pension scheme.

 

[STDFR33]

You need to factor in higher rate thresholds before deciding what to do.

 

[TheCyclingProgrammer]

You can be self employed and work for one client.

I think it’s reasonable to say that working for just one client might be a pointer towards disguised employment but ultimately it comes down to the working relationship and the degree of supervision, direction and control you have over the worker amongst other things.

The risk is yours so you need to decide whether or not there’s a genuine self employment status though as Cyndy says if the pay is low enough and you don’t need to put her on the payroll even if she was an employee it’s a bit of a moot point.

 

[paulears]

Do you actually need to pay your wife at all? If you take more drawings then she doesn't need any pay - this seems perfectly acceptable isn't it? Wouldn't that be much cheaper than NI, pensions etc?

 

[MyAccountantOnline]

Hello,

If my wife or my friend helped out occasionally in my sole trade business would I be able to pay them as a self-employed contractor even though they do not work for anyone else? Or is there a condition that someone who is self-employed can not only work for 1 business?

@Anthony Shepard you need to be really careful with employment status, getting it wrong can be very expensive.

Have a read here for some initial information, it should help.