The good news is that a partnership is very flexible meaning that you can change the partnership shares as often as you wish, so you can correctly allocate the profits to either one of you, depending on who is doing the work. You should leave around 30% aside for your tax liabilities (this may well be an over estimate depending on your level of earnings), teh rest can be drawn as you wish.
Hope this helps
JoeyW, post: 12428 a écrit : Hiya,
I'm new to this site and think it is great!
Brief intro to our situation...
Both me & my sister are freelance graphic designers. I originally was freelance and my sister was a fully employed graphic designer. She went on maternity leave from her job but then decided to leave to go freelance like me. I then fell pregnant with twins so she took over most of my contacts of work & umbrellered under my company name (I'm a soletrader). I am now starting to take on small jobs etc and will slowly start to take on more work.
We have now registered as a Partnership and staying under the original name that I worked under, we are just rebranding etc at the moment. We are just implementing a few things ie order forms to be signed, terms & conditions etc. Where can we find basic info/templates for this?
Our main problem as well, how do we split or work out payment for ourselves? has anyone else worked in a partnership? could anyone advise?
Any extra tips or advice for working in a small partnership would be great!!
As a contractor working through a Ltd Co you get a fixed rate - there should be nothing in addition to this - certainly no employers NI or holiday pay. If they wanted to pay you extra to compensate you for not having holiday pay etc then it should be as an increase to the hourly/daily/monthly rate.
I am a self employed contractor with a Ltd company who provides services to a client through an agency. I work for a client who regularly requests its employee's and contractors to do overtime to get the work completed to meet the deadlines.
A while back I was part of an umbrella company, and I was told that it was risky to be under one of these umbrella company's because they were the 'big fish' that the HMRC would likely target. I believe that there was some sort of new rules and regs that came in that these umbrella companies had to fall in line with. After a long meeting with their proposals, it was very unclear as to what they were offering. we were told by the umbrella company to 'trust them'. When I asked to get the details of the offer on paper, they refused....I wasn't comfortable with this as I felt they had something to hide, and this was when I decided the best route was to set up my own Ltd company.
About 2 months after this, the umbrella company threw in the towel and folded. This gave me the confidence that I had made the right move. It has taken me a lot of time, effort and stress to get my Ltd company up and running and to understand how to deal with the company affairs but now I am confident that I understand the process.
Recently, the client I work for has said that they are not prepared to pay holiday entitlement or employers NI as part of the overtime rates for Ltd contractors. They say that this is for their protection because apparently there has been a recent case where a Ltd company was prosecuted by HMRC and the client he was working for also got dragged into the case somehow (?). The agency I work through has told me that if I go with an umbrella company, the company will honour the holiday entitlement and employers NI contributions in the OT rates, and they went on to say that this is a safer bet for me to prevent an attack from HMRC.
As you can imagine this is very frustrating for me because I have come down the Ltd company road to be in a safer position than I was before, but now they are telling me that if I want to be safer, I must go back to an umbrella company which is where I came from! also this would be the only way to get the full OT rates which are much needed in my case because I am saving for a deposit on a house.
I am having a meeting with the agency on Tuesday.
Any advice on this scenario would be most appreciated.
felt_tip, post: 9541 a écrit : hello everyone, i just found this site and it has already been a massive help to my freelancing career. :happy
but i wanted to ask if anyone here knows a good way to keep track of your income and outgoings on a computer? i'm a freelance illustrator and although pretty handy on photoshop / illustrator etc i'm at a complete loss with financial software such as excel.
as it stands i have everything written down in a book which i hand over to my accountant along with receipts etc, but as my career progresses things are getting much more complicated. i'd love to know a way to input all of this data into a simple program whereby i can easily see what payments have been made, totals, plus more importantly who still owes me.
You need to ask yourself what your site does that Facebook doesn't. Why would someone pay anything to use your site when they can achieve the same ends for nothing?
MrHillman, post: 11880 a écrit : Hi All,
I have created a website, an adult contact site, not too different to that of social networking site, like facebook.
Currently has about 190 users, I was thinking of charging for this? What are your thoughts on social sites, that charge a fee, as little as £5 per month?
I have done some research on what similar sites offer and charge, and the most well known site charges upwards from £19.99 a month to a standard of £36 per month.
clairelitt, post: 11063 a écrit : I have been charged £880 for a year and 3 months. They prepared my income and expenditure account, did tax computations in order to submit my self assesment tax return. It works out at £700 a year - is that about right?
Bit steep if you are a sole trader, but all depends on the state of the books and records you gave to the accountant, and the amount of transactions.
Register now and the worst that can happen is they will fine you £100.
Marguerite, post: 9603 a écrit : Thanks Sarah.
I had a look at the HMRC website and I am getting very worried now. It says to register within 3 months. I have been very silly and did not check about all this, as at first I was not very serious about freelancing, just thought about building up my portfolio, get some money from this whenever possible and was earning very little. It looks like I am in trouble and I don't know what to do now.
I started doing some work 5 months ago, on/off. I am afraid I will get a big penalty which is going to cost me more than what I earned so far from freelancing.
Any suggestions from anyone on how to make it right?
Should I take a break and start afresh in a few months, and register properly?
Also after registering, will I be paying more taxes for my full-time job?
telga, post: 9454 a écrit : question regarding freelancing - i'm thinking of going into freelance journalism and i understand the lines between employment and self employment are tenuous. what happens if i do work on a self employment basis, say, as a sole trader and declare my income, pay my tax etc but later the tax man decides that the terms i was working under were actually akin to employment? i know the 'employer' has to pay extra tax and NI but what happens with the 'worker'?
Provided you were working as a sole trader and not through your own Ltd Company, then you would have no liability - all the tax and NI would fall on the "employer", not you. BUT the "employer" in their contract with you may well have a clause to enable them to claw the additional tax and NI back from you, so be careful.
I've just started freelancing full time and was wondering how much money to put aside for tax and NI. A few people I've spoken to say I should put a third of what I get into another account for tax and NI is this about right? is there a website I can go to for more info?
Another question I have is where do freelancers stand if there is a late cancellations? Do the employers still have to pay you?
Thanks
Put aside about 25% for tax and NI - that should be more than enough.
Typically, unless your contract says otherwise you will be unlikely to get any form of payment if the client cancels on you before the start of the role.
peteb3k, post: 9170 a écrit : Im currently in Australia on a tourist visa so i cant work here atm. Im a uk sole trader in web design and development.
Ive met a few australian businesses who would like me to do some work for them. Can i invoice them from the uk when im back? Can they pay me with Paypal perhaps? Do i simply declare it in my self assessment in same way as uk income?
Any good links on having foreign clients if self employed in uk? Ive googled and the results are a bit hazy :-s
Many thanks,
Pete.
Certainly nothing to stop you invoicing them when you get back - obviously get payment before you leave Aus though!!
In terms of tax, no different to having a UK client - you declare your income on your Self Assessment return.
1. No need to have an accountant, although I'd obviously recommend you do!
2. This is the date you first started to actually trade (for eg first day on client site)
3. Yes - whilst you can choose any year end you like there is no advantage to be gained either way
4. PAYE - If you are paying yourself any form of salary from the company (you say a minimum wage), then you need to be registered for PAYE
Hope this helps.
The Pixel Developer, post: 8816 a écrit : Hi,
I have recently set up my company and have a "Corporation Tax" form to fill in. I'm not sure on a couple of the points so I hope you don't mind me asking here.
Is it a requirement to have an accountant as authorised agent?
The date on which the company's first accounting period began : Would this be the date the company was setup? or the date when I received payment from my first invoice?
The date the company intends to prepare it's accounts : It's says this is usually the reference date you agreed with the companies house. This is : "Accounting Reference Date: 30/09". I'm going to assume this is 30th September 2009?
I'm also not sure if I fall under the PAYE scheme. I'm the owner and the only director of the company and would be paying myself a minimum wage. Does it only apply to companies that have employees?
I'm a bit confused about taxes. I read all the explanations on HMRC website, but I'm not 100% sure if I understand it correctly.
I worked in a permanent position until 2008-09-02, and they were paying my taxes (income tax and class 1 NIC) in PAYE system. I should be getting P45 soon.
On 2008-09-03 I filled self-employed registration on HMRC website,
and hopefully I'll have some revenues now :-)
Do I understand it correctly that:
* I need to set up direct debit for class 2 NIC by CA5601 form, independently from class 4 NIC and income tax?
* I will only have to pay income tax/class 4 NIC for the rest of the tax year (2008-09-03 to 2009-04-05) by 2010-01-31?
* HMRC will do all the calculations for me for no extra cost if I submit them information online by 2010-09-30?
* Are there any complication from being employed and then self-employed in the same tax year?
Thanks a lot for help
1. Yes.
2. Yes
3. Yes
4. You want to make sure you keep sufficient funds aside to pay the tax bill on your self employed income on 31st Jan 10 - this usually comes as a bit of a shock when people make the transition from employed to self employed. It all depends on your level of income from employment, but it is not unusual to find your self employed income being taxed at 40%, with Class 4 NI on top of that (this assumes you were a higher rate tax payer in your employed role). Also on 31st Jan 10 you will need to pay your first payment on account for the following tax year, in addition to the tax bill for 2009. This will be 50% of the tax bill for 2009.
NI gets far more complicated in the transition from employed to self employed as there are maximum amounts payable. These rules get very, very tricky, so best leaving it to your accountant, or indeed the Revenue.
Finally, well done on managing to fathom as much as you did!
regpalm, post: 4099 a écrit : Hi,
I have been reading the various questions concerning registering with HM revenue and it is something which I need help on too. I am currently trying to get some freelance work in graphic design but I have not yet got any. I am assuming that I would be classed as a sole trader if I get some work? Do I need to register straight away or do I try and develop some clients first?
On the HM revenue site it mentions that I will pay tax once i reach the 'threshold'. I don't really have much understanding on how/when/if to register. Any help on how I should proceed would be much appreaciated .
Thanks
I would definitely register first. Technically there would be no need until you get some income, but there is a three month time limit from that point after which you'd get a £100 fine for not registering. My bet is once you get your first paying client the Revenue would be the last thing you'd be interested in, so best get it out of the way!
I have registered a company in 2005 and in 2 days I have to fill my company's annual return.
However, I am not sure what kind of forms I need to fill. Does any one know the form's code I should fill?
* The company I have registered is Limited.
Many thanks
The form I think you are talking about is called a 363. Ring up Companies House and they will send you a copy.
You'll need to clarify a couple of things with them first:
1. What rate are they offering you? They are offering you the job so they will let you know how much they are willing to pay if you just ask;
2. Do they want to employ you as a PAYE employee, or do they want to use you as a freelancer?
Get these couple of points cleared up and then let us know and we can help you further.
lanubenegra, post: 1268 a écrit : Hola!
I am in troubles... After moving to London from BBDO Madrid this morning I had an offer from a big advertising agency. They want to employ me as a freelance Junior Art Director...
I said yes... But? How to become a freelance in UK?
What steps do I have to take?
How much should I ask per day?
Please help, because is the first time I go freelance and... coming from a foreign country I am very scared about taxes etc...
Thanks!
Sara
Just thought I would ask you guys for some advice.
I have a permanent graphic design job in-house but would like to eventually go freelance. I feel that the best way to do that is to stay employed but start picking up freelance work here and there until eventually I have enough to go solo.
What would be the best way of going about this – shall I register as self employed to start off with? And will I be able to then become a limited company when the time is right?
keni001, post: 946 a écrit : I had a limited company years ago but in recent years I've been using umbrella companies. Returning to a limited company have there been any changes to the amount or nature of expenses claimable? For example, I drive to work (70miles) and stay in hotels three or four nights per week. I therefore have meals away from home etc. Are these expenses legitimately offset against tax? Keni
Hi,
No real changes in terms of expenses over the last few years, so still perfectly allowable to claim for the travel, accommodation etc.
If you are really dead set against setting up your own Ltd Co then you are really stuck with PAYE. Whether you go through the agent or through an umbrella Co you will still get stuck with the employers NI one way or another, as if you go PAYE with the agency they will lower your rate to take this into account.
If you have no expenses than PAYE through an agency is easiest. If you have any form of work expenses then an umbrella you would better.
Finally, think again about the Ltd Company route. You will increase your income by well over 25% and it really isn't any hassle.
Best bet would be to ask your accountant to produce a letter for the Council - that should do the trick provided the accountant is qualified.
johnnyrules, post: 535 a écrit : Evening all! this is my first post even though ive been using this great site for over a year.
I have a quick query regarding payment slips and the Council Housing Department.
I've moved back in with my recently divorced mother in a council house. I also run my own ltd company (design/freelance) which has always been the registered address.
The issue i have is producing proof of weekly/monthly payments?
Yes, i am the owner and the only individual running my business and no, i don't pay myself a regular salary.
I'm coming up the the end of my first year in business (May) and as a result i didn't have to submit my tax return (business started after financial year).
Anyway, my accountant has advised me not to give myself a weekly/monthly salary but instead he'll sort it out next year, which is fine.
The only thing now is the Birmingham Council want to see my proof of income to know which rent they should be charging me (i take it they work in brackets, like taxable money?).
So how do i prove my income?
Any advice would be gratfully recieved, as i have to march my backside to the place it all happens!
Well, your friend is right to be concerned - even though she hasn't been sent a Tax Return she still has a legal obligation to notify the Revenue of her income. It sounds very much like she has simply fallen off the radar - it could be that the Revenue will catch up with her tommorrow or it may be they never will.
If they do catch up with her then they will assess her income over the last 5 years and send her a bill, together with interest and penalties which could be as much as 100% of the tax due (although more usually would be around 30%).
Setting up a Ltd Co would possibly flag her to the Revenue, but unlikely.
What should she do?
She really needs some decent professional advice tailored to her circumstances. If you ask her to email me at simon@sjdaccountancy.com I'd be happy to see what we can do to help.
robinga1975, post: 331 a écrit : A freelance musician friend of mine is having a bit of a tax nightmare that she's sticking her head in the sand about. It seems she hasn't been sent a tax return for some time - though she's reluctant to go into details, I get the impression from her haunted expression that it's at least five years - and is obviously very worried about the revenue catching up with her. She appears to have slipped through the net (she swears she's not even had a single letter from a tax office), but I would have thought it was only a matter of time before the taxman comes knocking. What are the advantages of coming clean as opposed to being caught? Either way I imagine she'll be bankrupted by the bill, but I gather there are penalties that may be more or less severe depending on this sort of factor. Also, if she set herself up as a limited company (as a couple of our friends suggest), how likely would the revenue be to check up on her "missing years"?
Alva, post: 120 a écrit : I've just registered as self-employed and will qualify for a certificate of small earnings. Should I get one, or are there major disadvantages? Very new to all this, and your thoughts are welcome!
No downside to this, but no massive upside either.
Small earnings means you will not have to pay Class 2 National Insurance, but seeing as these are only about £2 per week you are not actually gaining much!
suzisuzi, post: 121 a écrit : Just wondering if anyone has any experience of being a very occasional freelancer.
I just did a one off piece of work for an ex-employer and I'm just about to ask them to pay up 😃
If I don't anticipate doing any more freelance work - I'm now working full-time again, which is enough for me - do I need to register as self employed?
I've read the "Freelancing on the side" article, which was really helpful but didn't quite cover this I think.
Cheers,
Suzi
If it really will be just a one off piece of work then you can declare this on your Personal Tax Return as "Other Income".
If you do anymore then you really ought to register as a self employed freelancer with the Revenue
Am about to accept my first freelance position and need to set myself up as limited. Biggest scare appears to be IR35 and I am told that I need to be careful with contract:
1. What is the surefire way of being outside IR35 for someone like me who is a providing a professional intellectual service to a large client organisation?? Are there specific bullet points that I need?:
Complex subject, but main points to look for:
1. You should be able to send a substitute in to do the role in the event you are unable to do so. Unlikely that the client will go for this, so ask for teh clause to be put in but give the client the right to refuse the substitute if in their reasonable opinion they are unsuitable;
2. Make sure they have no control over how, when or where to do the project (subject of course to project deadlines)
3. Make sure that in the event they are unsatisfied with you they can dismiss you without notice.
4. There should be some element of financial risk on your part eg not being paid if the work is not up to scratch, the need to correct any defective work in your own time and at your own expense.
The last two points are of course to your detriment, but that's the nature of it.
Scoof100, post: 72 a écrit :
2. Should I avoid the words '....Services Limited' in the title of the company stationary and only use '.....Limited'?:
Makes no difference either way.
Scoof100, post: 72 a écrit :
3. Is there like an expert on the end of the phone or even a face to face service that is recommended or available for new starters like me?
Most accountants will give you some help and advice over the phone and many will offer an initial meeting FOC (us included of course! Accountants UK - SJD Accountancy - Chartered Accountants)
Scoof100, post: 72 a écrit :
4. Do you recommend VAT flat rate scheme in the main, or normal way? I realise that it may depend on the volume of purchases for the business; but this I do not expect will be excessive eg. Mobile phone, laptop, stationary, pda etc.
You would need to do a quick calculation, but if your VAT on purchases will be limited as you suggest you will almost certainly be better off going flat rate VAT.
Scoof100, post: 72 a écrit :
5. Do you recommend a local accountant that you can see, or do you recommend one of these faceless internet accountancy firms that promise everything for £75+VAT or thereabouts per month?.
You need to find an accountant that you can talk to, that explains things in a way in which you can understand and that has specialist skills in the area of freelancers. Face to face meetings are useful sometimes, and if you feel you would like one just make sure that the firm you choose can offer them somewhere local to you.
Scoof100, post: 72 a écrit :
6. What about PCG? Do most of you guys join??.
We have a fair number of clients that join. A great many of these find the discounted insurance to be the main benefit.
Scoof100, post: 72 a écrit :
7. What about bank account; do you go with a free set up as shown variously on-line, or do you walk into a high street branch. Any drawbacks here?.
The bank you have your personal account with would be about the easiest and they will probably match whatever deal you would be offered elsewhere for the first 12 months at least.
Loads of questions I know, but there seems to be a lot that I need to learn!
