Starting a company and being employed at the same time?

[wonder]

Hi

I've just been made redundant after the company I worked for went into receivership. I've got several options and I'm trying to figure my best route forward.

Several of the company's clients had work in progress - however, I can get the work completed (I work in digital marketing, it's websites that need completing). I also have relationships with several other companies that have expressed an interest in working with me.

For this reason, I'd like to setup a company.
- these clients will be happier dealing with a LTD company rather than a sole trader
- there are tax advantages

However, once this initial batch of work is complete, there is the possibility I will not find enough to sustain the business and I will need to find employment again.

So, I've got a few questions!:
- are there any legal barriers to my taking those clients with work in progress and completing the work myself & invoicing from my own company?
- if there is no more work forthcoming after this initial batch, and I need to
find employment - would there be any barriers to my employer paying my company rather than me so I still get the tax advantages? (paying myself dividends instead of a high wage etc)
- if an employer is unlikely to agree to this, will I get heavily taxed on one of my incomes? (either as the employee, or as the director)

Thanks

 

[Matt Quinn]

- are there any legal barriers to my taking those clients with work in progress and completing the work myself & invoicing from my own company?
- if there is no more work forthcoming after this initial batch, and I need to
find employment - would there be any barriers to my employer paying my company rather than me so I still get the tax advantages? (paying myself dividends instead of a high wage etc)
- if an employer is unlikely to agree to this, will I get heavily taxed on one of my incomes? (either as the employee, or as the director)

Thanks

You'd need to check the contract of employment you had with your old company. Not sure how enforceable any restrictions would be if they've gone bust.

Any new employer would need to be 'up for' this and frankly, I'm not sure it wouldn't put people off. However, I can tell you from my own experience (I have a part time job in addition to running my company) that if you have a job as an employee you're taxed on that in the normal way. 'Drawings' from the company then are best made as dividends and you 'render unto Ceaser' in the usual way...

 

[RedEvo]

Using a ltd company as a vehicle for working for one 'employer' will leave you in a tricky situation with respect to IR35.

However, from what you tell us here is sounds like you have the ideal launch platform for a new business. Put body and soul into it and the employment question won't even arise

d

 

[Astaroth]

So, I've got a few questions!:
- are there any legal barriers to my taking those clients with work in progress and completing the work myself & invoicing from my own company?
- if there is no more work forthcoming after this initial batch, and I need to
find employment - would there be any barriers to my employer paying my company rather than me so I still get the tax advantages? (paying myself dividends instead of a high wage etc)
- if an employer is unlikely to agree to this, will I get heavily taxed on one of my incomes? (either as the employee, or as the director)

Most likely your contract will state that the work done so far is their property and not yours so you would have to start from scratch with the work. Likewise most contracts these days have clauses preventing you from taking clients with you if you leave - it is always a risk if you decide to breach any terms of your esp if it is currently only in receivership and not actually closed yet.

As mentioned, there are some issues with people working for a single employer however these are less so for Ltds compared with sole traders

The incomes are simply combined for the purposes of taxation so there is no penalty on if you are earning a combined £100k from 1, 2, 3 or 10 different sources

 

[Chris Kaday]

If you are good at what you do which seems likely I wonder why you don't decide to build your business instead of finding employment but the fact that you don't is probably a good reason for not doing so if you get my meaning

Chris Kaday