At our open day in November 2012, we were delighted that Antony Federer from Rayner Essex accountants popped in with cake, and to give a talk entitled “Tax Tips – My top 5 for freelancers.”
This was a lively presentation with plenty of interaction and discussion – thank you Antony. Here is the first of his five top tips:
Consider incorporation – that is, setting up a limited company. There are some myths about how complicated this is – it isn’t! I remember when Atlas incorporated and it was indeed very straightforward.
There is no audit, it’s very low cost, and all your record keeping will be just the same. But you will get tax savings when you compare to being a sole trader.
As an example, Antony said if you have a profit of £25000, you could make a tax saving of £1575 if you were a limited company, rather than a sole trader.
You can be a limited company even if you are working alone – a company can consist of one person. You may increase savings if you add in a spouse/partner.
As a limited company, you will have limited liability, which gives you extra security and protection. It may boost your image with clients, who sometimes prefer to work with companies rather than individuals.
You’ll also have flexibility with planning throughout the tax year and beyond.
Look out for the next four tax tips!
If this has given you food for thought, then do consult a reputable accountant to help you further. This information was correct at time of Antony’s presentation in November 2012.