Any IT contractors out there?
Discussion
Would you have more than one client ?
If you effectively contract back to the firm you are currently employed by then IRD can take a perverse view of that and insist upon PAYE from the "employer".
The second year is also a
when provisional tax kicks in.
I'd suggest talking to your accountant first.
Best of luck
If you effectively contract back to the firm you are currently employed by then IRD can take a perverse view of that and insist upon PAYE from the "employer".
The second year is also a
when provisional tax kicks in. I'd suggest talking to your accountant first.
Best of luck
Thanks Graham. It would be only one client. It is (or at least was) fairly common practice in the UK, but it sounds like there maybe aren't the same benefits over here. A bit more digging required methinks...
I knew several UK contractors who had their wives, children, pet dogs (ok, I made the last one up) registered as salaried "company directors" to minimise any profit and therefore the tax paid. A new company car every year (usually something sporty and expensive) also helped to dent the pre-tax profits!
I knew several UK contractors who had their wives, children, pet dogs (ok, I made the last one up) registered as salaried "company directors" to minimise any profit and therefore the tax paid. A new company car every year (usually something sporty and expensive) also helped to dent the pre-tax profits!
Yes it was I, although I recently went 'permie' after 7.5 years!
Basically you can claim lots of the usual expenses and right-off costs of equipment etc but you do have to be careful about the one-client thing. I believe there is a time limit to it. I've always made sure I had smaller clients on the side so I could justify it. You can do this and exchance your services for others - for instance look after the hairdressers PC and they cut your hair etc. Of course it's all taxable.
I don't believe you get the same benefits from having a limited company as we used to in the UK (pre-IR35). I used to have my Mum as company secretary and paid her a small salary (she only worked part-time so I used the rest of her allowance) then most of my income came in the shape of dividends. Overall I think I paid 22% tax. You can't get anywhere near that here but there are some useful gains. Beware, converting back though - it's very expensive, especially when you are suddenly earning a lot less!
Basically you can claim lots of the usual expenses and right-off costs of equipment etc but you do have to be careful about the one-client thing. I believe there is a time limit to it. I've always made sure I had smaller clients on the side so I could justify it. You can do this and exchance your services for others - for instance look after the hairdressers PC and they cut your hair etc. Of course it's all taxable.
I don't believe you get the same benefits from having a limited company as we used to in the UK (pre-IR35). I used to have my Mum as company secretary and paid her a small salary (she only worked part-time so I used the rest of her allowance) then most of my income came in the shape of dividends. Overall I think I paid 22% tax. You can't get anywhere near that here but there are some useful gains. Beware, converting back though - it's very expensive, especially when you are suddenly earning a lot less!
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