Electronics engineering contracting under "limited company" or "umbrella" - Page 1
Forum section: electronics / general

author: ocset
author_rank: Super Contributor
timestamp: May 20, 2019, 07:09:43 am
content: 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 prison2….Having to pay hefty finesSo isnt "Umbrella" working just so much safer?

author: ataradov
author_rank: Super Contributor
timestamp: May 20, 2019, 07:54:20 am
content: 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.

author: mikeselectricstuff
author_rank: Super Contributor
timestamp: May 20, 2019, 08:52:22 am
content: Quote from: treez on May 20, 2019, 07:09:43 amYou 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 liabilityThere is software that will do most of it for you.First step would be to talk to an accountant.

author: mikeselectricstuff
author_rank: Super Contributor
timestamp: May 20, 2019, 08:52:53 am
content: Quote from: blueskull on May 20, 2019, 07:10:48 amThere is no need to get a lawyer involved. An accountant will know all the relevant regs etc.

author: NivagSwerdna
author_rank: Super Contributor
timestamp: May 20, 2019, 09:17:46 am
content: Quote from: treez on May 20, 2019, 07:09:43 amNoQuote from: treez on May 20, 2019, 07:09:43 amYou need to do regular returns.. budget somewhere between £1k or £2k p.a. to get an accountant to do this for you.Quote from: treez on May 20, 2019, 07:09:43 amNope. It's just different. Probably a similar price.DO try and stay within the rules to avoid tears later.

author: CJay
author_rank: Super Contributor
timestamp: May 20, 2019, 09:30:07 am
content: Quote from: blueskull on May 20, 2019, 09:19:14 amAnd the one after that:"Do I have to declare the full value because paying duty would make my products cost more"

author: sokoloff
author_rank: Super Contributor
timestamp: May 20, 2019, 10:52:19 am
content: 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.

author: IanJ
author_rank: Unknown
timestamp: May 20, 2019, 11:45:57 am
content: 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.

author: bdunham7
author_rank: Super Contributor
timestamp: May 20, 2019, 06:28:39 pm
content: Quote from: sokoloff on May 20, 2019, 10:52:19 amIn 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)