What's more at MXR Consultancy we have a specialist tax team who can provide advice to candidates on the most tax efficient route to their next gainful employment. So if you're a candidate and trying to decide between self employment or running your own limited business we can help.
If you're still unsure we’ve put a list of pros and cons for each to help you make up your mind.
Limited Company – Pros
- Running a limited business can be the most tax efficient way of working.
- Having a limited business means you are in complete control of all financial matters.
- Limited formation means you will have access to the VAT Flat Rate Scheme.
- Running your own business isn’t difficult (it may be time consuming but it isn’t hard).
- A limited company has greater opportunities for tax planning than PAYE Umbrella.
Limited Company – Cons
- Running a limited business can involve plenty of administrative paperwork.
- If you set up a limited company then you will be tied into accountancy fees and having to prepare your annual accounts at the end of the year, regardless of how much work you did. So if you are only contracting for a short time period then limited can be costly.
- Setting up a limited business is not ideal for low earners/ income.
Self Employment - Pros
- You get to decide your own hours so can fit work around your family life.
- You answer only to yourself and your client.
- You get to work on different projects and meet new people.
- You can offset expenses against your profits thereby reducing your tax.
Self Employment - Cons
- Being self employed can often mean feast or famine & is dependant upon when contracts come in.
- Loss of earnings if you take a holiday.
- Taxation is slightly higher than being a limited company.
- When working from home you can sometimes lose the division between home and office hours.
PAYE Umbrella Company – Pros
- A quick & simple process where you just need to provide a time sheet and any expense details, then merely wait to be paid.
- No HMRC worries as all your NI & Tax is deducted at source and before you receive your pay.
- Umbrella solutions can be great for short interim contracts.
- Insurance policies included as part of the service.
- Umbrella companies do the bulk of any administration or paperwork.
- Umbrella can be great vehicle to use especially if you’re still unsure if contracting is for you or if you’re in between jobs.
PAYE Umbrella Company – Cons
- With Umbrella your salary will be subject to full PAYE Tax & National Insurance.
- You are relying on the umbrella company to collect your invoice money from the agency or client and then to pay it to you.
If you’re still unsure whether limited is right for you and would like to discuss the matter further than our friendly support team is just waiting for your call.