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Questions about going self employed- what to include in a daily rate?



desprateseagull

New member
Jul 20, 2003
10,171
brighton, actually
Been looking at some jobs, that although will be regular hours, will be on S/Emp basis - no paid holidays, sick leave, bonuses etc..

I've always been employed on 'PAYE' before, so welcome some advice from you luvverly NSC'ers-

Say using a base rate of £100 a day (using national average wage of £26k, pro rata - 5 days a week, 52 weeks).. how much would you add on, to cover costs of doing accounts, health insurance etc? Oh, and VAT?

Not sure how anyone could (afford to) start from scratch into a job like this, having to wait two months before any money starts coming in..
 


Diego Napier

Well-known member
Mar 27, 2010
4,416
Been looking at some jobs, that although will be regular hours, will be on S/Emp basis - no paid holidays, sick leave, bonuses etc..

I've always been employed on 'PAYE' before, so welcome some advice from you luvverly NSC'ers-

Say using a base rate of £100 a day (using national average wage of £26k, pro rata).. how much would you add on, to cover costs of doing accounts, health insurance etc? Oh, and VAT?

Not sure how anyone could (afford to) start from scratch into a job like this, having to wait two months before any money starts coming in..

I think you'll find there are a few contractors working in the financial services sector and post on here who can tell you all you need to know about paying the absolute minimum to the tax man!
 






Aug 15, 2003
224
Falkirk, Scotland
You will need your business insurance (this depends on your trade i.e. Public Liability, Professional Indemnity, Equipment cover etc); an accountant will cost about £100 per month; you may have to pay your National Insurance Contributions. This is just the start of it!
 




Herr Tubthumper

Well-known member
NSC Patreon
Jul 11, 2003
59,210
The Fatherland
Been looking at some jobs, that although will be regular hours, will be on S/Emp basis - no paid holidays, sick leave, bonuses etc..

I've always been employed on 'PAYE' before, so welcome some advice from you luvverly NSC'ers-

Say using a base rate of £100 a day (using national average wage of £26k, pro rata - 5 days a week, 52 weeks).. how much would you add on, to cover costs of doing accounts, health insurance etc? Oh, and VAT?

Not sure how anyone could (afford to) start from scratch into a job like this, having to wait two months before any money starts coming in..

I'd base your year on less than 52 weeks for holidays.
 


matski_98

Well-known member
Apr 16, 2012
531
Been looking at some jobs, that although will be regular hours, will be on S/Emp basis - no paid holidays, sick leave, bonuses etc..

I've always been employed on 'PAYE' before, so welcome some advice from you luvverly NSC'ers-

Say using a base rate of £100 a day (using national average wage of £26k, pro rata - 5 days a week, 52 weeks).. how much would you add on, to cover costs of doing accounts, health insurance etc? Oh, and VAT?

Not sure how anyone could (afford to) start from scratch into a job like this, having to wait two months before any money starts coming in..

I've been freelance for 6 years so have been through all the stuff you're talking about. When I started I had a bit of inheritance that I used as seed money till I got off the ground but I was fortunate enough to find work (and get paid quickly) so I hardly touched it but you will need a couple of months money saved (or a credit card) to get yourself started.

I think I initially used the same logic as you for working out day rates but then soon realised that other people in the same field as me were charging double what I was so I followed suit. Remember that not only does your day rate need to cover holidays and sick but also when you're between jobs. Have a scout about and find out what other people are charging and use that as a base line.

You don't need to worry about VAT until you're VAT registered.
 


Herr Tubthumper

Well-known member
NSC Patreon
Jul 11, 2003
59,210
The Fatherland
Out of interest, is this change a life-style decision or because of lack of PAYE options?
 




Doesn't your turnover need to be more than £82k before you have to worry about VAT.

The compulsory VAT registration threshold for 2015/16 is indeed £82k; however, depending on the type of business and how it's structured, it may be financially beneficial (eg Flat Rate Scheme) for it to be voluntarily registered.
 


Bold Seagull

strong and stable with me, or...
Mar 18, 2010
29,722
Hove
You will need your business insurance (this depends on your trade i.e. Public Liability, Professional Indemnity, Equipment cover etc); an accountant will cost about £100 per month; you may have to pay your National Insurance Contributions. This is just the start of it!

That is really expensive for an accountant. For a sole trader doing an annual return, it shouldn't be much over £400-500. For a limited company model with only the one employee, it probably jumps to £600-800. Believe me I did a lot of shopping around and asked a lot of other people in my profession what they were paying it is around these figures.

I will add that the accountancy requirements of a sole trader are relatively simple. If you weren't flat out when you start, then get on a few youtube lessons, and keeping your own books and doing returns is an easy way to save £500 per year. The NI is calculated when you do the annual return. The only thing you really need to be good out is putting enough away to cover those annual tax bills.
 


jakarta

Well-known member
May 25, 2007
15,616
Sullington
I'd base your year on less than 52 weeks for holidays.

I wouldn't bank on having any holidays at all Years 1 and 2 - I think I had one weeks holiday in my first two years.

Oh and as to the original question, how long is a piece of string?

Are you going to be a Self Employed Street Sweeper or Brain Surgeon?

You must surely know the going Day Rate for whatever job you do?

Mine is £500 per day plus expenses, pity I don't actually pay myself that but I'm The Director of a Limited Company and run PAYE for its one and only employee (also me). And yes, if there is any spare dosh I do pay myself Dividends as well. :thumbsup:
 
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SIMMO SAYS

Well-known member
Jul 31, 2012
11,702
Incommunicado
Been looking at some jobs, that although will be regular hours, will be on S/Emp basis - no paid holidays, sick leave, bonuses etc..

I've always been employed on 'PAYE' before, so welcome some advice from you luvverly NSC'ers-

Say using a base rate of £100 a day (using national average wage of £26k, pro rata - 5 days a week, 52 weeks).. how much would you add on, to cover costs of doing accounts, health insurance etc? Oh, and VAT?

Not sure how anyone could (afford to) start from scratch into a job like this, having to wait two months before any money starts coming in..

I was told forty years ago to fiddle like feck.
Forty years later this country is giving aid to India that has a space programme :moo:
I have survived being self - employed since 1973----you can do it IF the people want you.
 








melias shoes

Well-known member
Oct 14, 2010
4,830
You will need your business insurance (this depends on your trade i.e. Public Liability, Professional Indemnity, Equipment cover etc); an accountant will cost about £100 per month; you may have to pay your National Insurance Contributions. This is just the start of it!

Absolute nonsense. An accountant will not cost him £100 a month. I do my accounts myself and have no accountancy fees. Some I know do have accountants but their costs come to nowhere near what you predict.
 


Soulman

New member
Oct 22, 2012
10,966
Sompting
That is really expensive for an accountant. For a sole trader doing an annual return, it shouldn't be much over £400-500. For a limited company model with only the one employee, it probably jumps to £600-800. Believe me I did a lot of shopping around and asked a lot of other people in my profession what they were paying it is around these figures.

I will add that the accountancy requirements of a sole trader are relatively simple. If you weren't flat out when you start, then get on a few youtube lessons, and keeping your own books and doing returns is an easy way to save £500 per year. The NI is calculated when you do the annual return. The only thing you really need to be good out is putting enough away to cover those annual tax bills.

Yep.
 






Dolph Ins

Well-known member
May 26, 2014
1,525
Mid Sussex
Be honest with the good folk at the tax office. I have been investigated 3 times and I am 99% straight. My accountant costs £300 a year to do my tax returns but I give him complete books. As you point out you don't get holiday or sick pay. There are also 9 bank holidays. Do you want/can you work them? Then vehichle, insurance, stationery, phone, internet, postage, advertising, tools, training......oh bloody hell anything you are going to have to pay for. You don't have to register for VAT until your turnover is over £80,000ish. Prob not worth becoming a limited company unless you turnover more than £50,000.

I have been SE for 25 years and could not bear going back to being employed. ENJOY!
 


SIMMO SAYS

Well-known member
Jul 31, 2012
11,702
Incommunicado
Absolute nonsense. An accountant will not cost him £100 a month. I do my accounts myself and have no accountancy fees. Some I know do have accountants but their costs come to nowhere near what you predict.

My yearly accounts cost around £500.00 ---but I do present him with all my in-goings/outgoings in several A4 boxes that I sort during the year.
This takes me a couple of hours a week x 1 year.
 



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