All the tasks that were completed by the HR Department are now left to you, so here are some simple ideas to get you started.
You may be new to contracting but here at Clearways Accountants we are old hands and we can guide you through your options…
What’s the difference between contracting and freelancing?
There is no standard definition but we like to think of a contractor as someone who works full-time for one client for a number of weeks or months (or even years).
We define a freelancer as someone who has a portfolio of clients, rather like an accountant, and the freelancer will work for a half-day or a day on a specific project or task for a client.
Does this difference matter?
Well yes, if you are a freelancer then you have the option of starting out in business as self-employed. If you are a contractor this option will not be open to you.
If you would like more information on setting up in business as a freelancer then see our blog post on, “Are you new to freelancing?”.
So I’m a contractor, should I join an umbrella company?
You may want to do this when you start off your contracting career. When you join an umbrella company you will become one of their employees, they will process your invoices and collect your customer payments. Every time your customer pays an invoice you will receive your salary less any tax and national insurance.
An umbrella is a straightforward way to start off contracting. If the life does not suit you then it is relatively simple to hand-in your notice to the umbrella and close your contract.
You can read more on the pros and cons of umbrella company Vs Limited Company on this blog.
When should I think about setting up my own Limited Company?
You can set up your own Limited Company straight away and never contract through an umbrella company or you can contract through an umbrella company for a while.
Once you set-up your own company you will be able to start benefiting from the tax flexibility and planning opportunities that arise when you run your own company. You may also find that your accountants fees are less.
It is easy to set up your own Limited Company but quite difficult to close a company so it is worth thinking about it before taking the plunge. Once you have decided to use a company you will need to be disciplined about keeping the company income and cash separate from your personal cash. Using a firm of chartered accountants to complete the paperwork for you can help keep you on the right side of company and tax law and our fixed price Limited Company package will cover your requirements.
If you still cannot decide what is best for you, why not contact us for your free one hour consultation.