Stay paye or go self employed?

[Robster694]

Hi all first post but have used this forum for lost of valuable information in the past. Here is my current situation and would be grateful for any help and advice

Been with my company 7 years now, done a jtl apprenticeship with them. Got my level 3 nvq and 17 edition. Currently on £11.36 ph 8 hr days, with no over time or weekend work. Company van with diesel card, but not allowed to use in own time
Spoke to the boss about anyways of earning more money and he said the only way would be to go self-employed. He would pay £160- £180 a day but would have to work out weather i would be better of after i have shelled out for van, insurance and diesel.
He would also pay my tax, i believe this would mean i would have to go cis registered?? Then i would only have to pay my ni.
I am really tempted to go for it, I like the sound of being self employed going out finding different work, but as im new to it finding it a bit of a mine field at the moment and so confused, so any help would be much appreciated

 

[telectrix]

i would go for it. take his 160 a day and build up your own client base at the same time, doing small jobs weekends ( but not poaching your boss's clients). then if the job goes ---- up, you've got a start on your own. just the initial van etc. buy a cheapie from ebay, private sale or motor auction

 

[oldtimer]

Why dont you do both there is a misconception that you have to one or the other but that is not the case all you have to do is stay on the books get your tax and NI paid (the NI is important because this will go towards your state pension) then set up a part time business and as long as you notify HMRC and get PL insurance you are good to go and as long as you do not earn more than £76k then you dont have to register for VAT.
Then when you have built something up then make the decission

I forgot to add that your employer will save money on transport and employers NI contributions plus insurance and one last thing the HMRC will not accept that you are subbied to one firm ie you need to have 3 sources of income to be self employed.

Have you included holiday in your rate

 

[D80]

A lot will probably depend on the area you are in and working in, its tough out there at the moment. A job on the cards gives a little bit of security(just a little, not a lot!). If company your working for now gets a little slack they would be more likely to keep you doing something, if self employed you may get more days off that bargained for. Holiday pay is there with job on cards, not when self employed.

Costs a lot to start up and if England/Wales based you need your Part P if doing domestic, or NIC AC if going for the bigger stuff. I'd get some sort of business plan together - see what it's going to cost you to get started from Van, Testers, Ladders, Tools etc to Accountant and Scheme fees, and then go from there.

 

[Spazz]

Do both, stay Paye with your employer and register as self employed, you tax that you pay win PAYE willbe more than your Tax bill at the end of the year, so you should get a rebate.
You can then work weekends and afternoons as needed.

Personally I wouldn't leave your job until you have a client base, as finding clients is not the easiest and the last thing you want is to be out of work for several weeks.

Also if you leave your employer PAYE he might stop giving you the jobs and give them to someone else.

Start yourself up slowly and then wind down the hours in PAYE and see how it goes.

Always have a backup plan

 

[oldtimer]

Just to add that if you stay in PAYE you can sign on (if you have to) plus you might not think the state pension is no big deal and a couple of years ago if you were a a lazy sod and never worked a day in your life you qualified for income support on top of the obligitory state pension which was unfair on the folk ie my old mum worked all her days and got £2.90p as a second state pension whic meant she did not qualify for income support so she had to pay part rent and council tax plus she got £100 cold weather payment the waster next door paid no rent no council tax and got £200 because she was on income support.

But remember things have are changing because if you have only paid 20 years NI contibutions you will only get 20/30ths of the state pension.

Sorry to drone on but I hope you get the jist plus any earnings fro SE bank 30% and when the bill comes in its paid so dont be a clown who has to run about scraping the money together to pay it

 

[Robster694]

Thanks for all the advise guys. I work in south east and mainly do domestic work. My company has a long standing contract with council, test and reports, rectifications and rewires. We have got another contract for electrical side of refurbing travel lodges. My boss said he is looking to put subbies on this job anyway as it will be to expensive for the blokes of cards to be doing work??
So I would be on this 5 days a week by looks of things. If I was to go self employed all by work would still be from my company. Is there not a rule where you cannot sub of the same contractor for more than 12 months?

 

[alarm man]

he could also drop you like stone when theres no work on,you get paid 5 days a week with holidays and whatever other perk you have now regardless of how busy you are,what would 2 days a week sound like,then you have to go and find another 3 days work competing with all and sundry,what if it conflicts with your gaffers work,you will be down to 1 day a week then none when he gets someone else,theres only one winner here mate,and its not you..

 

[Dave 85]

Mate £160-£180 a day is obviously better than £11 an hour whatever way you look at it. The ideal situation is for him to give you 4 days work a week and you build your own customers up doing privates on the other day/weekends etc. That way, even if you get no private you still get £640 minimum a week. The most important think is make absolutely sure he is gonna give you minimum 150 days a year work before you take the plunge, else you're in trouble. Building up domestic clients generally takes a long time and as far as im concerned the only sure fire advertising you can rely on is word of mouth.

If you do get £180 a day five days a week all year (realistically about 220 days a year) thats £39,600 minus about 3-5k for vehicle/tool expenses so your profit will be about £35k with a vehicle you can use whenever you want so no need for a car.

 

[i=p/u]

on the same boat , so going self employed now...

what rate would an accountant want????

can i start as self employed even tho i aint sorted a UTR yet??? anything else im missing, im interested... trhanks but im sure i will learn as i go along... actually start tomorrow

 

[alarm man]

Mate £160-£180 a day is obviously better than £11 an hour whatever way you look at it. The ideal situation is for him to give you 4 days work a week and you build your own customers up doing privates on the other day/weekends etc. That way, even if you get no private you still get £640 minimum a week. The most important think is make absolutely sure he is gonna give you minimum 150 days a year work before you take the plunge, else you're in trouble. Building up domestic clients generally takes a long time and as far as im concerned the only sure fire advertising you can rely on is word of mouth.

If you do get £180 a day five days a week all year (realistically about 220 days a year) thats £39,600 minus about 3-5k for vehicle/tool expenses so your profit will be about £35k with a vehicle you can use whenever you want so no need for a car.

you can spend 5k a year just on fuel,never mind the other costs of being se and taxes

 

[Spazz]

on the same boat , so going self employed now...

what rate would an accountant want????

can i start as self employed even tho i aint sorted a UTR yet??? anything else im missing, im interested... trhanks but im sure i will learn as i go along... actually start tomorrow

i=p/u

Dont forget you dont need an accountant if your going S/E. as long as your ok at managing your own books then you can do all your own accounts - thats what I do.
I use Quickbooks Pro - £170 from Amazon, but I use it to manage my stock (meters of each cable left etc)

Works really well

If you dont want the stock part or the Payroll then Quickbooks simplestart will do the same job (£59 from Amazon)


At the end of each tax year you just hit 1 button and it tell you how much you have made per year, month, week, etc

It also tells you turnover, profit and what to stick into each box on the Self Assessment. - Really easy but you have to be on top of your accounts


HMRC dont ask for any profit but if you have 3 years at 0 or negative profit then they will do a tax investigation on you, if you set it up correctly it will also connect to your bank account and you can keep track of your account through the software.
You can also print cheques as well.

it lets you take card payments as well (at a fee of course) using RBS worldpay

Rates

• Free Set-up
• Monthly fee of £15.
• Discounted Credit cards rate: 3.45% per transaction
• Discounted UK Debit Cards rate: £0.40 per transaction

 

[Adam W]

Swings and roundabouts IMO - I work self employed for a company via an agency - I get paid a slightly higher rate, can claim things like mileage, tools, parking etc and it makes it easier to do private jobs legitimately, but I don't get sick pay, holiday pay etc and they can get rid of me without notice.

 

[oldtimer]

on the same boat , so going self employed now...

what rate would an accountant want????

can i start as self employed even tho i aint sorted a UTR yet??? anything else im missing, im interested... trhanks but im sure i will learn as i go along... actually start tomorrow

Mind inform HMRC or you will get a fine I think the time period is 3 months but check to make sure

 

[Spazz]

Self employed is great but theres no security.

What I was doing before when I was training Health and Safety courses was be self employed and getting my own customers in on weekends then during the week working 5 days a week on the books but paying a higher rate of Tax.

Come April - stick in my Self Assessment and I get a nice cheque back usually about £400 - £800. This years was £390 rebate - so there is never tax to pay.

Just make sure you pay your NI on time

 

[i=p/u]

if i dont have UTR will i get charged at higher rate of tax(emerg) till i get UTR.... im just going to get an accounntant, iver heard £100-£150 a year......

as for national insurance, im led to believe they will post me slips which i will pay at post office monthly..

if i get work for myself on the side, how do i go about this, i.e ive priced for attic conversion where i will earn more in 2 days there than i will for a company...

 

[Spazz]

As soon as you register as S/E you get a UTR.

They post slips every 3 months and you pay them in the post office or you can go down the Direct Debit route

It is illegal not to declare work that you do and get paid for - however we all do it
If I got the wrong end of the stick - you need to make note of it and keep a record of how much you do and then when you do your SA (Self Assessment) you fill it in accordingly.


Dont get confused between company and business
Company = limited = employed as a director
Business = sole trader/Partnership = all profit belongs to the owner(s) of the company

 

[Spazz]

You only get charged a higher rate of tax when you tick 'I have another job' on the P46

 

[i=p/u]

but being self employed , you could be working for different dudes all the time.

so its really one big job but under differnt people..

say i wanted to go get niceic for my own work would this be counted as 2nd job??? as it myself or just pay 20% . do i bill myself ha

 

[Spazz]

If you are NIEIC then it belongs to you!

You can get NICEIC for a company as well, but if you get it for a business then its you unless you employ a sparky and its based on them.


What I am doing is registering it in my name, same as the insurance (as I am a sole trader) it makes no difference to my customers but it means that I am covered even if I do work outside of the business, even though any business is only a trading name of a person and not a company.

Dont forget a business is a single person or partnership (more than 1 person) and a company is not connected to anyone at all - hence why a company can be in thousands of pounds of debt and when they dissolve, so does the debt, as it does not belong to anyone - hence no protection if a company owes you money and they dissolve

 

[tombrooker84]

I'm no accountant, but I was under the impression that it was worth setting up a limited company if your earning over 50k a year, due to the fact that after 50k you pay less tax than you would as a sole trader due to the company tax being only 20%. Also there is the added benefit of limited liability?

 

[Spazz]

That is true yes - but that income cant be used as your wages then, you will have a set amount that you can take out (as your wage) and the rest belongs to the company.


A Limited company is great if you or a partner (business or personal) has loads of debt


Situation that my nabour is in now:
She is in loads of debt so the bank has just reprocessed her flats (5 in total). If she had made the business (of renting flats) a company (which has now been done with the other 3 flats in the block owned by different people) the bank cant reprocess them.

Only problem is if the company is in trouble is based at your house you have to prove who bought the house so that does not get reprocessed.


Setting up a company is also great if the director does not have much credit score as when s/he sets up a limited company the credit score is mid way - allowing borrowing and credit, but some companies/businesses (like myself) wont give credit to companies unless they have been running for at least 2 years and have a very good credit score.


Have a chat with a personal adviser about it.


You can always set up as S/E then change into a company - just write to all your creditors (people you have accounts with) explaining why your changing from a sole trader to a company and they should be happy to change the account over as you have a good reputation with them already that you have built up

 

[i=p/u]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

 

[Spazz]

And dont forget if you set up a limited company then you dont need to register as S/E because you are not S/E, you are employed by the company! - therefore an employee - but the employer if you have people on the books.

The company is the employer for you, and has to be registered as an employer and file your PAYE regular as if you would if you employ someone

 

[Spazz]

so if i was a sole trader, i could still rent myself to a company and bill them like self employed....

is sole trader harder to achieve, is there much difference

Exactly!

If you set up as a limited company and the company gets NICEIC then you cant use that yourself unless the company is contracting you out - the HMRC will want to see you charging for this - even if its family



If you are S/E and get NICEIC its yours! and you contract yourself out to your customers - could even be family - family you wont have to charge as HMRC dont have access to your EICs or PIRs

 

[Spazz]

No difference at all.

Excuse me from asking:
Are you in any debt?

If the answer is - how much would depend on if you want to go as a sole trader or company

If a debt collector comes after you for debt and your Self Employed (sole trader) then they can take all the business stuff off you as well

If you set up a company and the company owns the equipment (even your house) the debt collector can not take any of them (just make sure you have documents to prove it)

Same if you pay maintenance - If you are a sole trader - the maintenance will look at the business accounts and take that into account (same if you divorce)
With a company they cant look into them at all - so not effected with divorce or maintenance


So personal debt, maintenance, going through a divorce (or risk of it) or very high turnover (above the threshold (£100,000 at current) are all good reasons to set up a limited company

 

[i=p/u]

as you say speak to an advisor of some sort.. but thanks for the info to now..

 

[Spazz]

Also check out here

This is the tax rates you pay - if your going to come into the lower rate (only profit is counted) and dont have any of the above issues then you might as well be a sole trader

If your going to be in the higher rate (profit only) and/or have any of the above issues then a limited company is the best option for you




Bed time now for me

 

[alarm man]

i feel the need for a drink all of a sudden..

 

[i=p/u]

thanks nicholas, i am going to go self employed for now as thats where i can get work .... bar the odd we job here and there... im growing like shetland pony everyday


alarm man no alcahol, nice fresh the marra, smell good

 

[alarm man]

thanks nicholas, i am going to go self employed for now as thats where i can get work .... bar the odd we job here and there... im growing like shetland pony everyday


alarm man no alcahol, nice fresh the marra, smell good

just a couple will do mate,i need to keep a clear mind when it comes to avoiding paying for your kids and your debts,while i work 7 days a week to feed my family and pay my bills..and pay £1200 a month tax and ni for those who dont..im just off to the fridge again mate....

 

[i=p/u]

if thats what you are paying tax and ni what arnt you paying then , dont suppose you got porche 911 camara like myself

 

[alarm man]

if thats what you are paying tax and ni what arnt you paying then , dont suppose you got porche 911 camara like myself

what im not paying,is there anything left to pay,if so im going on the dole and having another 20 kids..another thing i found out the other day,as of next year anyone in the house earning over 42k isnt allowed to claim child benefit that includes you and the wife if one of you earns over 42k,tho 2 people in the house earning 40k each ie you and the wife earning 40k each can still claim it..how does that work? i wonder why i bother sometimes:cuss: