Going self employed

[jordantaylor]

Hi guys,

as many of you know i have just started back at JRO Griffiths & Sons in Shropshire.

I have been talking to the boss though and he has recomended that i go self employed as he thinks i will benefit more from this.

Also he has said i wont always be required to work there as there isnt enough work but he dosnt want me to go and get a job with somebody else as he wants me available to work there if and when he needs me.

All i want to know is if any of you are self employed and how you get on with it. The pros and cons ect..

also what are the tax rates for self employed workers?

 

if anybody has any info it would be much appreciated. i have had a look on the net and ive found a bit of info but none of the sites are specific

 

Many thanks

Jordan

[Deere-est]

I'm self employed Jordan and you have to do it for your own reasons and not Mr Griffiths. He wants it all his own way - wants you when he needs you but not all year, nor pay you holiday, sickness and so on.

 

I went self employed as I got in with a contractor and an HGV driving agency and the two went well together. Now, five years in it isn't all so rosie!

 

While I have never been short of work, quite the opposite infact, the lack of paid holiday, bank holidays and so on is a bummer. I didn't look into all this properly when I started out and now I realise this. Think long and hard about it mate, long and hard.

[powerrabbit]

Self employment is a good thing if you go into it with your eyes open. Firstly you need to know your tax implications and for this you need to employ the services of a good accountant. He or she will advise you on what your tax liabilities may be based on what your earnings projection per annum would be. Calculate your out-goings and include everything that you pay out and, although you will not be able to calculate your income, no self-employed person can, work out what you are going to charge for your services per hour, not what you're offered, look up the hourly rate for the work you intend doing and charge according to the scale on the chart and take into consideration your qualifications as the higher the qualifications you have in relation to the work will command a higher charge rate, this of course you will need to negotiate with whoever you offer your services to. On the tax point you will need to keep very accurate accoiunts, income and out-goings, issue invoices for work and keep a copy for your records, you will have to pay your own National Insurance and where liable, income tax at the end of each year and for this you will need the services of an accountant. That's a basic outline but as I said, speak to a good accountant and if they are any good they will give you sound advice and inform you of your liabilities and any advantages, until you do this, like Tris says, long thoughtful concideration is needed. I have been self employed since 1970 on the family farm and have a reasonably good handle on the topic after all these years. Best of luck.  

[MuirHillyBilly]

I'd agree totally with the chaps above, been self employed is not all rosey as the responsibility for tax, NI, VAT (if applicable) and other costs need to be continually adhered to as the old HMRC are not the most flexible of organisations . I run a limited company and toyed with the idea of sole trader but my accountant said it was a cumbersome process and if things go wrong you are entirely liable (which can be devastating if you get behind on tax) It sounds like the current employer wants it all his way (limiting his exposure to liability) so you should think very hard about whether you, and only you, can afford to live consistently, rain or shine as a self employed person.

[Deere-est]

Just a brief note on the tax side of things, I pay a standing order of £200 per month through the year towards my tax bill which becomes due at the end of January. The £2400 I pay through the year is deducted from the total bill - half of which is paid in January, the other half in June I think. It's a great way of doing it an means that you're not handed a great big bill to be paid in one hit.

 

As for the rates, work out how many weeks you intend to have off. It's not good trying to compete with PAYE employees as they get paid on their off days. If you have say four weeks off intentionally, that may mean 50hrs a week on average that you won't get paid. After working out your hourly rate, divide those holiday hours over the remaining 48 weeks of the year and add it on - that way you'll get your paid holiday. This is something I never even thought of and as others will say a week off work is expensive. As well as not being paid, you're also spending so it can be like having two weeks off in a way!!

[8feetmower]

There are also rules about whether you can be self employed or not.For example there's only a certain percentage of time worked can be charged to one person,whether or not you supply own tools or machinery or whether there are set working hours.If your boss can tell you when to work,not ask if you're available then as I understand it you can't be self employed for him,only a part time worker.

Edited December 27, 2012 by 8feetmower

[jdc]

There are also rules about whether you can be self employed or not.For example there's only a certain percentage of time worked can be charged to one person,whether or not you supply own tools or machinery or whether there are set working hours.If your boss can tell you when to work,not ask if you're available then as I understand it you can't be self employed for him,only a part time worker.

I understand the Revenue are tightening up on this - if you drive Mr 'X's tractor for 3 months you are not self employed and using your 'tools' under their definition.

 

Would agree with all the comments above, if you are already self employed (with an income), fine, go do some work for Mr 'X' but don't become self employed just to suit one 'customer'.

[powerrabbit]

Being self-employed in esscence is having your own Company or buisness and, as said previous, carries more responsibility on you but can have an advantage over being an employee. If you earn below a certain amount per annum and work blow a certain number of hours per week you may be able to claim Working Tax Credit which in the 'early stages' would be of help and a great benefit to you. It may also be a good idea to take out an insurance policy for sickness and injury if you are unable to work and you should, especially if you intend using machinery, have Public Liability insurance. If it's a 'service' that you will be providing then you will probably need to register for VAT but this I think is voluntary for below a certain turnover but again is advantagous for you to reclaim VAT on your 'inputs' (purchases) for your buisness such as tools, clothing and a proportionate amount on your fuel costs but this reclaim will need to be ajusted against what VAT you have to charge, if your VAT on outgoings is greater than your incomings then you claim back the difference and vice versa, this can be done either monthly, quarterly or annually, there is a lot of information for the self employed on the HRMC website. As I 've said previously though, consult a good accountant and then you will be able to gague for yourself the feasability of your plans. 

[Deere-est]

Yes, 12wks is the maximum you can work in one period for one customer. As for VAT, I am not but all my work expenses are written off against my tax bill anyway so it makes no odds me. Being VAT registered is more advantageous to people who supply as well as work. For example, a gardener who has to buy plants to then sell to his customer, a farmer who sells a machine or buys a new one and so on. As for the working tax credit though, Tim I can see that being a nail in Jordans coffin. Farmers arn't going to favour a chap who says he can't work more than X hours or at weekends if he hits his maximum by Friday during peak seasons when he is most wanted. Jordan it is difficult weighing it all up, there is no single best way to do it. Like Tim said, talk to an accountant first for the legal/HMRC side of things and talk to people who's businesses could work together to share you not those that will all need you at the same time of year!! Definitely take out a sickness and injury plan, look at pensions, look at savings..... Your accountant will explain all sorts of ways to claim expenses or everything, domestic costs, fuel, workwear and so on.

[tractorbob]

we have 2 lads self employed with us ,one does 60hrs a week x £12 (no holiday pay) othe is with lkl and gets holiday pay..they both love it....3 of us a employed on the books

[MuirHillyBilly]

Also regarding VAT don't forget it rolls over, people often get caught because they fall below the threshold between say January and December but if they go over the threshold between, for example, July and June they will hit you with a charge. In short the VAT threshold does not reset after each year.