TAKE MORE HOME FREE GUIDE CONTRACTORS RETAIN UP TO 90% OF YOUR INCOME ARE YOU CONTRACTING THE BEST WAY?
1CONTRACTING? Contracting Being a contractor can allow you greater flexibility in the hours you work and the type of work you do. As a contractor, you ll sell your time and expertise for a fixed time and normally get paid by the hour or by the day. As a contractor you can take home up to 90% of your contract value, rather than the 60-65% you might expect as a full-time employee under PAYE. Companies use contractors because they give flexibility and the demand for contractors is growing enormously. Contractors can bring skills to a company that their own teams may not have, or can provide additional capacity to meet deadlines. As a contractor you re more flexible than permanent staff and because the firm won t normally have to pay your sick pay, holiday pay, redundancy pay or employer s National Insurance, then they can afford to pay you more and still spend less money. As you know, being a contractor is a very different lifestyle to that of an employee as there are more risks but also many advantages: Contractors typically earn better pay than permanent employees for doing similar work. By using Contractor Pay you could retain as much as 90% of your income. Am I contracting in the best way for me? There are three main ways that you can choose to work as a contractor: Working through an umbrella company. Being self-employed. Running your own limited company. There are pros and cons for each option and we know that every contractor is unique. You ll want to work in a way that best suits you and your customers, and we can work with you to understand your vision and your personal circumstances. Because we offer a wide range of solutions you can be sure that our advice will meet your particular needs. Whichever your preference, if you are earning over 200 per day, you can keep up to 90% of your income. And that s after income tax, national insurance and our fees have been deducted. The flexibility and freedom you have over when and where you work and essentially be your own boss. Pay less tax - contractors who take professional advice can also reduce their tax liability. Increase your skill set - contractors can develop varied experience and an impressive CV from working in a number of contracts and companies, making them far more desirable for future positions. For a more detailed breakdown of our services or to question our experts on any aspect of contracting, please call us on 020 7788 7766, or send us an email to info@contractor-pay.co.uk. DECIDING HOW TO CONTRACT 2 DECIDING HOW TO CONTRACT 3
2OUR UMBRELLA 3SELF-EMPLOYED Maximise your take home pay This is the simplest and most hassle-free option. You become an employee of our umbrella company and your client or agency enters a contract with us for your services, charged at your normal hourly or daily rates. You simply submit your timesheets to us for the work you have done and we invoice the client or agency. We handle all the paperwork and chase payments. You are then paid by us as a PAYE employee, less our small administration fee. The benefits of working this way are: Take home up to 90% of your contract value. There are no joining fees. There are no long-term obligations or leaving penalties. It s quick and easy, with minimal paperwork. It s fully compliant with UK tax legislation. Minimise your tax burden This is generally the simplest way of being your own boss. We can manage your contracts and invoicing using our UK billing agency, and you can rest assured that our fully qualified accountants are on hand to give you the advice you need. Good, professional contract and invoice management means that you can get the best rate of return for your contract value. In addition, we can complete your self-assessment tax returns ready for you to sign. Benefits include: Retain up to 90% of your contract! Dealing with your invoices and contracts efficiently and cost-effectively. Professional accountancy advice. Your tax returns completed for you by qualified accountants. Qualified administration services to save you time and money. Our step-by-step guidance to becoming self-employed. Easy submission of timesheets. All administration is done for you - no need to manage your own tax, NI or payroll. You can be set up and ready to go in a couple of hours. Being part of an umbrella may suit you if you want flexibility as to when and where you work, or if you want to try out the contracting lifestyle without making any major commitments. It may also suit you if you see contracting only as a very short-term option. DECIDING HOW TO CONTRACT 4 DECIDING HOW TO CONTRACT 5
4LIMITED COMPANY 5FORMING A COMPANY Contracting via your own limited company While using an umbrella company is the simplest option for many contractors, running your own limited company is usually the most tax-efficient way of contract working - meaning you can get to keep even more of your earnings. Therefore you may prefer to contract via your own limited company and continue to invoice your clients or agencies through your business. Our limited company solution can help you maximise your profits and effectively administer your business. Benefits include: Retain up to 90% of your contract value. Continue to operate as you do now through your own business. Reduce corporation tax as a result. Setting up a new business Could working through your own limited company be a wise decision? For some it may well be, whilst others may choose an umbrella company for simplicity and peace of mind. The real decision comes down to personal choice - yes, you may take home more money, but you will spend more time managing and operating your company. The three main things you will need to do are: 1 Find a company name This can be quite exciting and at the same time, challenging. Getting the right name sets the tone of your business and can help you in selling your services and expertise. Either way, you ll need to check with Companies House that your chosen name is available before forming your new limited company. Professional accountancy service. Qualified administration services to save you time and money. 2 3 Form your limited company There s no need to worry when it comes to forming your limited company. Our in-house experts can take care of the whole process for you - registering your company and doing all the leg work on your behalf. Sit back while we manage the paperwork Our limited company solution will help you to continue contracting as you do now while keeping more of your income through good tax management. All invoices are dealt with professionally and efficiently, payments chased and paperwork completed on your behalf. We offer an all-inclusive accountancy service to those operating through their own limited company and can provide you with the intelligent business advice you need. DECIDING HOW TO CONTRACT 6 DECIDING HOW TO CONTRACT 7
Umbrella or limited company? Things to consider.. Here to help Administration Running your own limited company means that you have to manage all of the administration that comes with it, which can be quite daunting. To make life easier for you to set up and run your business, we can offer a range of payroll, tax and administration services to help you deal with the sometimes complex rules and legislation. Liability In most cases the law considers your limited company separate from your own financial affairs and this limits your liabilities. For example, it will normally be your company and not you that enters into contracts, and it will normally be the company that is responsible for any debts, should there be any. If your limited company gets into difficulty and goes bust then you shouldn t lose your house or other property. However, if you act dishonestly or recklessly, for example, buying something you know the company can t afford, then your house and other property could still be at risk. We can provide you the right professional advice to make sure that your limited company is more of an asset than a liability. Paying yourself As owner of your limited company you can pay yourself in both salary and share dividends. Dividends are a portion of the company s profits that are returned to you as the shareholder. Paying yourself a low salary and taking further money out of the company in the form of dividends can be personally very tax-advantageous. Once you have decided your salary you will need to set up a payroll and put money aside for tax and National Insurance. You may pay less personal tax by leaving some money in the company and not withdrawing all of it in salary and dividends. Limited companies may also claim back a range of expenses and anything that is classed as a business cost, such as accountancy fees, equipment and software costs. There are many opportunities for effective tax planning through a limited company. Our experts are able to discuss your personal circumstances in greater details to find the best option for you. DECIDING HOW TO CONTRACT 8 Our friendly team possesses a wealth of experience working in the contractor sector; supporting contractors, interims, freelancers, engineers, consultants and small business owners. Whatever your circumstances, we pride ourselves on being able to tailor a solution to meet your needs. Take home up to 90% after tax and deductions. No joining fees. No long-term obligations or leaving penalties. Fully compliant with UK tax legislation. All administration completed for you. For a more detailed breakdown of our services or to question our experts on any aspect of contracting, please call us on 020 7788 7766, or send us an email to info@contractor-pay.co.uk. DECIDING HOW TO CONTRACT 9
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