Anyone an IT contractor?

[Nicely]

Just about to start IT contracting and I've been told I have to start a limited company. What's the deal with this? Anyone done this, and how does it all work with taxes, NI and so forth?

[JB]

It's a total nightmare keeping all the paperwork up to date but far, far better thanh working for someone else :thumbs:

Have a look here Ltd Co Info (http://www.leathesprior.co.uk/index.asp?area=1&page=104) and then book yourself an appointment with a decent accountant would be my advice :)

[Nicely]

Thanks.

Think I've established at the moment that it's easier to use a specialist company formation organisation initially to get the ball rolling. May need to speak to someone about things like taking a salary and paying tax, etc.

[AndyT]

I used to be a contractor a few years ago, but the law changed with IR35. You can keep 5% in the company for admin costs, but the rest must be payed as a PAYE salary to yourself. The good old days of minimum wage and huge dividends (less tax) have gone. Get a good accountant and if you are going to be earning over £50,000 a year (don't know the exact figure now), make sure that you are VAT registered.

[kirkster]

Speak to shauna wight at Giant (http://www.giantgroup.com/default.asp)

Tell her andy kirk told you to call her and ask her about the managed limited company scheme. I had my own limited company for 2yrs then I moved over to an umbrella company as got pissed off with VAT inspections, taxman on your case etc etc.

You get expenses and stuff and i take home 85% of what i earn, a lot better than PAYE.

You just pay them a weekly fee, which is quite reasonable, seeing as accountancy fees can hit 500 - 800 quid for a decent one.

You end up with soooo much work to do, for little extra gain really.

Go the umbrella route if i was you.

Shauna's number is 0207 5200567

Kirky.

[Goblinslayer]

I did this for 3 years, in 97-2000, before ir35 so that tax breaks were better :-) some of this may have changed but here's a start.

Most important, get a good accountant, there are plenty about (acountacy is easy) but best if they have other contractors on the books, talk to these others to get an idea on how good they are...

The accountant should be able to set up a company for you, it's quite easy, you will need another person you trust to be a director and company secretary with you (I used my parents).

Get a business bank account, shop around, they are sometimes doing deals to start-ups, I got free banking for 18months and interest free overdraft when I did it :-)

Register for VAT with the accountants, it helps make you look more professional, plus you can claim VAT back on essential business purchases (anything you can pass off as this) and hoidays (travel to trade shows etc :-))

Also every mile you do in your car is business milage, so claim this back from your company at the inland revenue rate :-)

Pay yourself the minimum to keep your stamps up with PAYE, and take the rest as dividends (you don't have to pay employers NI on dividends).
Use up any tax allowances for family members by giving them shares :-)

Mostly a good accountant will do all this for you, mine cost about £1000 a year, but saved me thousands in tax and stuff :-)

As for paperwork, keep all your receipts and invoices, and let the accountants sort it out, a shoebox is your friend :-)

edited:

Errk just read other replies re tax, it seems I got out just in time, LOL

[Nicely]

Thanks, guys. All helpful. Kirky's suggestion looks a good 'un at the mo. :thumbs:

[kirkster]

Any time dude.

Kirky.

[Geeza]

I think everybody on here (well at least most), is or at least was an IT contractor at some point... including me. :wave: