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Freelancing help


chippy2710

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Due to my current employment status the company I have been working casual for now want me to be a freelancer (I also have a PAYE job) I have looked into it and this is something I'm willing to do. However this is all new to me and I'm a bit clueless.

Would you suggest taking on an accountant?

How do day rates work. Do I charge a day as (for example) a maximum of 8 hours or from 00:01 to 23:59

Rough guesstimate as to how much I would charge. I know price fixing is illegal and I'm not asking for that but as I said no idea.

Just in case someone says "depends what you do" the only proper qualification I have is in music tech and I have been running gigs with mates and running the sound since I was about 14 so I'm a fairly capable noise boy. I can do lights although not as well. I also do sets all the way from covering to stitching them together and putting them in, and obviously staging. I do not just work on site I also work in their warehouse pulling and counting back in tech equipment, general painting and a bit of covering set panels.

Jack (and sometimes joker) of all trades.

Any help would be much appreciated.

Cheers

Edit: meant to say PAYE job elsewhere. Not that it makes much difference but I thought I would clear it up if anyone was unsure.

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Hi Josh, cheers for the reply. I do intend to work for other clients in the long run, especially as they aren't busy all year and have the occasional dry spell. There are a few other companies I have contact with and I'm looking to get some work with.

Eventually I hope to be able to spread a bit further and work for a few companies.

 

 

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1 Don't hire an accountant, untill you are recieving work from more sources than you can comfortably handle yourself

 

2 Read up on tax, etc

 

3 IIRC then HMRC barely even recognise "freelance", you are "self employed".

 

4 If you expect to work less than a day for "day rates" then also expect to work more

 

5 Charge the "going rate". Or maybe a little less. Like everyone else..

 

6 Profit?

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Cool. So no to the accountant. I have read up on tax and intend to set up a separate bank account to put 30% of my money into to look after tax.

Would you say that £100 a day was too much? Too little? Just right? Bearing in mind most of my days are 9 hours or longer.

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Chippy, I might be wrong on this so it would be good if someone could clarify, but the issue you're talking about it something called IR35. It basically says that you're either freelance, or you're employed. There's no middle ground, and you should be able to prove you are one or the other with no confusion.

 

If from what I understand is correct, your company wants to make you freelance for their own financial gain (understandable in current financial times). However, if you were to simply walk out the door and then back in as a freelancer and carry on doing the same job, for the same money and never change, then you would be falling foul of IR35 and you and the employer would get in trouble. I think that would apply even if you genuinely were going to look for more work elsewhere at some point.

 

I downloaded this guide recently which is not only full of useful tips and information, it's also very well written and a good read for anyone looking at freelance work:

http://www.freelanceadvisor.co.uk/go-freelance-guide/go-freelance-guide-2010edition/

 

Like I said, I might not be 100% correct on IR35 but I'm pretty sure that's the area you need to be looking in.

 

On the flip side of this, setting yourself up as freelance and going to down all the correct routes is actually very straight forward, so as long as you play by the rules, I say go for it!

 

EDIT: I just realised I might have misinterpreted the question being asked, but either way that guide will be a good start.

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Yes, sorry. I should have explained that better. I was working for free or near to free they have covered travel/ accommodation expenses. Now I'm going to be paid properly as I am actually useful rather than actually slowing people down by asking too many questions.
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Also, you can't be seen to be invoicing per hour or similar - the advice from the vast majority of companies I have been contracted by is that they must be invoiced a set fee for the project, and not for x hours or x days. You can base your fee on hours or days, but you can't invoice it like that. Which means potentially that if you agree a certain fee for a project and it takes twice as long as estimated, you lose out. Also, don't forget that you will also have to consider things such as PLI when setting up.

 

HMRC also suggest that if you are working solely for one or two companies as a freelancer, then you are actually probably not self-employed but employed (as Josh mentions). I'd have a good read of all of the advice on HMRC's website before committing to anything.

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Personally, I managed to find a great accountant, who charges me a few hundred quid a year but saves me a lot more than that in tax savings I wouldn't have noticed myself, and does all the form filling and handling general inland revenue rubbish.

 

But you need to shop around and find an accountant who understands what you're doing.

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It's well worth remembering that HMRC have differing rules for different areas of activity - tax and national insurance being dealt with quite separate ways. One regular client who I work for on an open ended contract, now terminates the contract each December, and renews it in January - so for 3 weeks a year, we're basically nothing to do with them. This was to do with their status with HMRC.

 

So if you have multiple clients with different tax rules, you've got very little chance of finding a happy medium. At some point, it's likely you'll have to accept paying tax, or NI or both at some point, and having an accountant to advise on how to even record this in your books is worthwhile. You issue an invoice, and only receive part of the payment, because they've given some of it to HMRC - some kind of artificial balancing payment is required or your books don't balance. damn complex.

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Welcome to BR Chippy, take some time and use the search function where you will find many topics on how to set up as a self-employed business.

 

It can seem complex and be aware that specific info may give the wrong impression. For instance;

either freelance, or you're employed. There's no middle ground
Whereas it is perfectly possible to be both for tax purposes. I pay PAYE on my pension and self-assess my self-employment. HMRC is great at helping people sort this type of thing out, use them. http://www.hmrc.gov.uk/selfemployed/tmastarting-up-in-business.shtml

 

Check out topics on PLI in the search function, there are masses of them.

 

Business link used to be a good source of information for newbies, dependent on your location. http://www.businesslink.gov.uk/bdotg/action/home

 

An accountant will pay for himself when you have sufficient income but you can manage without for simple start-ups. Good luck with it all.

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It can seem complex and be aware that specific info may give the wrong impression. For instance;

either freelance, or you're employed. There's no middle ground
Whereas it is perfectly possible to be both for tax purposes. I pay PAYE on my pension and self-assess my self-employment. HMRC is great at helping people sort this type of thing out, use them. http://www.hmrc.gov.uk/selfemployed/tmastarting-up-in-business.shtml

 

Sorry I meant in regard to one company. It was my understanding that you couldn't be working for them and being paid on PAYE, while at the same time being self employed and invoicing the same company for other work?

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Not sure, Will, but I can envisage a part-time worker for a company taking self-employed sub-contracts from the same company with only a bit of organising to maintain separation.

As long as the self-employment is genuine and the worker can provide substitutes etc it should be OK.

The taxman decideth!

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