Hello all
i just wondered if i could ask for some advice regarding setting myself up as a consultant/contractor (is there a practical difference?)
I work full time for an educational organisation and have been asked by another one if I would help them out as a contractor to keep work ticking over
whilst someone goes on maternity leave. they have tried to recruit the mat cover but could not.
my current employers have a consultancy arm that will deal with liability etc at a cost, but I wondered what else I needed to do to set up myself from
a tax point of view?
do I need to set up my own company? register etc
not sure its worth the hassle at the moment
cheers
They could just take you on as a part-time employee, on a short-term contract.
If you set up your own company, you will save a little tax and they can deal company to company, so they don't have to worry about tax, pensions,
NI, etc.
If you join an umbrella company, you won't save as much tax, but there is little for you to do (the organisers of the umbrella company will do it
all for you) and you will again be dealing company to company.
However, as your current employers have a consultancy arm, presumably the other company could contract with them and you could just be paid for the
hours you do through your existing employer - but you are likely to receive a lot less.
You also need to check, as some employment contracts preclude you working for someone else as well.
Can't advise on the consultant/contractor side of it, but SteveWalker raises a goog point about some employment contracts preventing you working
for other people.
Also who'd do your current job while you're doing the mat cover job?
Will there be a job for you to come back to (if that's what you want)?
first thing i would do is go and speak to an accountant
Good point made above about checking your current contract of employment but even then, if you talk it over with current employer and they agree that
covers that.
If its just a short term bit of freelancing on the side while still doing your main job then the hassle/cost of setting things up might not be worth
it. One way we used to get around this in construction is to use an agency as an umbrella employer. Basically, you are taken on by the agency as an
employee on something not unlike a zero hours contract, the agency hires you out to the firm that needs the work, the agency gets paid and then pays
you after taking their fee, sorting out tax and NI etc. I've done it that way when taking on people for short periods. I also worked myself that
way after I was made redundant a few years ago while waiting 4 months for a new permanent position to start. Agencies who specialise in short term
contract staff are well set up for this arrangement and I guess there are some that operate in the education sector. If you were going to be doing it
for more than a few months then going the self employed/own company route might work out better financially but you'd almost certainly need an
accountant if you go down that road.
thanks all. I've had a few conversations today (accountant,I. F.A etc) and the upshot seems to be that if I can get 45% of the fee via our own
consulting arm that will be a good deal, and minimal hassle. Its then just a question of setting the fee at an amount I am happy with based on that.
work have a policy to allow staff to work elsewhere so that's not a problem.
the hassle of setting up a company isn't worth it, especially since there are fewer loopholes these guys regarding the taxation dividend
payments, etc
thanks all
You will also need PL insurance.
quote:
Originally posted by bozla
You will also need PL insurance.
quote:
Originally posted by nick205
Not done this kind of thing myself, but curious all the same.
PL insurance = Public Liability insurance?
If so, is that something an umbrella company would typically provide you with (to be checked of course)?
My employer has Public Liability insurance amongst other business insurances. We've had occaision where customers have requested copies of the insurance documents when setting up larger value contracts. Typically part of their Due Diligence checks.
[Edited on 5/5/22 by nick205]
Watch out for IR35 - it's an Inland Revenue rule that covers contractors, and whether or not they're actually employees or true
self-employed contractors. It's a horrendous minefield. It's too complex to explain here, but you should really make sure that you're
not sucked into that black hole.
Thankfully it was only just coming into force at the time I stopped being a self-employed contractor.