Date post: | 08-Aug-2015 |
Category: |
Small Business & Entrepreneurship |
Upload: | booxaccountants |
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The
of becoming a
Freelancer
Why, What,How & Where
Taking the plunge and opting to become a freelancer is an exciting yet daunting career choice, so here's some advice to help ensure everything runs smoothly and successfully.
Why become a freelancer?
To achieve a better work/life balance
To escape the 9-5 routine
To be in control of your workload and productivity levels
Extract your income
efficiently
Deciding to become your own boss is the first step, next you have to choose whether you will operate as a Limited Company, Sole Trader or use an Umbrella Company.
How will you operate?
To boost your net income
£To claim business expenses
Sources
Boox Contracting Guide: http://www.boox.co.uk/contractor-limited-company/
Sole Trader
Simple to register
All the profits are yours
You are liable for your firm's debts
No registration fees
File selfassessment return
Savings and assets such as your
home are at risk
Not essential to have an accountant
but advisable
Profits taxed as income
Pay class 4national insurance
on profits
Pay class 2national insurance
UmbrellaCompany
These include tax and National
Insurance contributions on a
Pay As You Earn (PAYE) basis
Setting upin this way is
quick and easy
You pay the umbrella a fee each time you
are paid
Payments haveto go through a
third party before they get to you
Take home payis between 67-76%
the value ofyour contract
Control is inthe Umbrella
Company's hands, you are reliant
on them to collectyour money
You become an employee of an
umbrella company
Your servicesare contracted
out by them
The company will invoice your
client directly
You will be paidby the umbrella company oncethe necessary
deductions have been made
Limited Company
Register with Companies House
More rules & paperwork
Profits relate to the company
File self assessment return
for director(s)
Need Profit & loss account, balance sheet and notes
Pay corporation tax return online
SUBMIT
Submit corporation tax return online
Pay class 1national insurance
on any salary
Liable for amount of share capital
Take income as salary, dividends and reimbursed
of expenses
Share ownership of the company and dividend income with your spouse
Make more of your profits through
better tax planning
Vs Vs
Become a freelancer in 5 easy steps
Learn about IR35
See our guide for more in-depth advice and information on
beginning your career as a contractor.
Set up your Limited Company and bank account
Take the hassle out of your finances with an
online accountant
Choose how to operate
Find work
What are the key things to consider?
Moving from permanent employment to contracting means you have to:
Plan for sickness
File annual accounts at Companies House
Submit your own personal tax returns
Chase payments
Submit Corporation tax, VAT and PAYE returns
Register your business
Plan for holidaysFor Limited Companies