EEVblog Electronics Community Forum
General => General Technical Chat => Topic started by: ocset on May 20, 2019, 07:09:43 am
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Hi,
Do you know which is best for electronic engineering contracting? (in UK) ...is it "limited company" or "umbrella".
Suppose the contracts finish, and you then take a permanent job somewhere, isnt there a big fee to close down the "limited company" if you went that route?
Also, there are huge fines if a “Limited company” doesn’t do all its tax returns…even if you have an accountant to do it all, surely it means having to place too much trust in that accountant to manage the books in a way that’s not going to get you…
1…sent to prison
2….Having to pay hefty fines
So isnt "Umbrella" working just so much safer?
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We all here are experts on the UK law. Taking any advice from this forum will create you more problems than any bad accountant ever could.
Yes, you have to place trust in the accountant. Read the reviews and don't be cheap and you will be fine.
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Hi,
Do you know which is best for electronic engineering contracting? (in UK) ...is it "limited company" or "umbrella".
Suppose the contracts finish, and you then take a permanent job somewhere, isnt there a big fee to close down the "limited company" if you went that route?
Also, there are huge fines if a “Limited company” doesn’t do all its tax returns…even if you have an accountant to do it all, surely it means having to place too much trust in that accountant to manage the books in a way that’s not going to get you…
1…sent to prison
2….Having to pay hefty fines
So isnt "Umbrella" working just so much safer?
You wont go to jail unless you are deliberately fraudulent for significant amounts.
You dont have to close the company if you get a job. It can just sit there not trading.
Accountants have legal obligations to do the job correctly, and they have liability insurance.
There is nothing stopping you doing the accounts yourself. Or getting the accountant to do all the figures, checking them yourself and submitting returns yourself.
For a contracting business, the number of transactions will be low, so wont need a great deal of accounting work ( at least until you start wanting to arrange things to minimise tax liability
There is software that will do most of it for you.
First step would be to talk to an accountant.
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Have you ever heard of a job title called attorney?
There is no need to get a lawyer involved. An accountant will know all the relevant regs etc.
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Suppose the contracts finish, and you then take a permanent job somewhere, isnt there a big fee to close down the "limited company" if you went that route?
No
Also, there are huge fines if a “Limited company” doesn’t do all its tax returns…even if you have an accountant to do it all, surely it means having to place too much trust in that accountant to manage the books in a way that’s not going to get you…
You need to do regular returns.. budget somewhere between £1k or £2k p.a. to get an accountant to do this for you.
So isnt "Umbrella" working just so much safer?
Nope. It's just different. Probably a similar price.
DO try and stay within the rules to avoid tears later.
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Treez's next thread: how can I get a license to import from China and sell in UK.
And the one after that:
"Do I have to declare the full value because paying duty would make my products cost more"
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The advice to seek the counsel of an attorney is a good one, because these numbered questions are not the only ones to consider.
Presumably treez (or maybe it's his friend that he's advising) wants to understand the different liability scenarios, both financial liability (where an accountant could offer some limited advice) or professional/E&O liability (where they shouldn't and likely won't).
If the UK law is similar to the US law, a one-person LLC offers substantial financial financial liability limitation, but somewhat limited personal negligence liability limitation. (IANAL; I'm on the side of the table who pays lawyers for advice when I need it; you should too.)
If treez-LLC runs up some business debt that they can't pay, but was otherwise properly run, treez-human is probably not on the hook for it. But if treez-human stamps a document that they're not allowed to stamp, engages in customs impropriety, etc, the presence of treez-LLC doesn't protect treez-human (or treez-friend-human) from any liability.
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Hi,
I used to work under an umbrella arrangement but now am using my own Limited company and with my own accountant etc. I only use the umbrella company as an agent to enable the contract and to invoice.
My opinion, I would avoid working under an umbrella arrangement right now as the Gov is looking at IR35 as we speak so things may be about to change.
Get a good accountant, a trustworthy one and they'll save you money in the long run. The Umbrella companies on the accountancy side, in my experience, don't give a toss.
Did I mention IR35?.........keep your eye on that one.
Ian.
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If the UK law is similar to the US law, a one-person LLC offers substantial financial financial liability limitation, but somewhat limited personal negligence liability limitation. (IANAL; I'm on the side of the table who pays lawyers for advice when I need it; you should too.)
If treez-LLC runs up some business debt that they can't pay, but was otherwise properly run, treez-human is probably not on the hook for it. But if treez-human stamps a document that they're not allowed to stamp, engages in customs impropriety, etc, the presence of treez-LLC doesn't protect treez-human (or treez-friend-human) from any liability.
In practice, as opposed to theory (and by this I mean when things go bad and and there's enough money at stake that litigation ensues) the single-member LLC often doesn't provide much financial shielding either. The reasons are numerous and complicated, but the bottom line is that it the LLC is over rated and over used as a sole-proprietor alternative. Unfortunately, most LLC owners don't find this out until they are in trouble. (I am a lawyer, but this is just my experience litigating such things--this is not legal advice)