1) What measures have been taken by Pinnacle Freelance Ltd (PF) for the smooth transition of operating a Personal Service Company?
· A Company Formation Agent will set up a Limited Company at Company House for the temporary worker
· The temporary worker will be nominated as Director of their own Limited Company
· The Director will make arrangements to open and manage their new Limited Company Bank Account
· The Director may choose to appoint Pinnacle Freelance Services Ltd as duly Authorised Accountants in the conduct of the new Limited Company’s taxation and administrative matters.
· Pinnacle Freelance Services will deal with all Government statutory bodies on behalf of the temporary workers and ensure that regulations in relation to same are dealt with.
· The Director will need to appoint a Company Secretary, if necessary, the Director can choose to appoint Pinnacle Freelance Ltd (PF) as Company Secretary.
· As Director’s you can decide to nominate the Limited Company shareholders, resulting in the redistribution of tax liability.
· The Directors will be able to decide their own take home pay, if required Income Tax Free.
· Director has optional to draw down their income either as salary or dividends or a mixture of both.
· Our system will be paperless – for the Director and the Recruitment Agencies
· On the Directors behalf, as per to their time sheet, PF Ltd will invoice the Recruitment Agency.
· The Agency will pay directly to the Directors new Business Bank Account.
· Pinnacle Freelance will e mail the Director on weekly basis - Statutory Deduction Statement and a PF Invoice for service provided.
· If required, Pinnacle Freelance Services will advise the temporary workers on personal financial, tax and pension situations
· Pinnacle Freelance will pay referral Bonus for recommending other temporary workers
· Pinnacle Freelance will provide a seamless quality service to the Agency and the Director.
2) What are the benefits to the temporary worker by registering new Limited Companies?
· You will be your own boss
· Re-distribution of company shares
· Full control of your income earned - you can dictate your own terms of salary and dividends from week to week.
· Choice of not paying any Personal tax (PAYE) and NI contributions
· Individual Tax planning
· Company accounts filed at Companies House - by Chartered Accountants
· Invoice the agency - paperless service
· IR 35 Opt out
3) Who will be responsible for the day to day operations of my Personal Service Company?
· The Director is in full control of the day to day dealings of the company.
· It will be the Director who will need to instruct and advice Pinnacle Freelance of their business.
4) Can anyone be appointed as Company Secretary?
· Yes, the Director can choose freely to appoint anyone as Company Secretary. It is not necessary to give any shares to the Company Secretary.
· It is optional, the Director can appoint Pinnacle Freelance Ltd as Company Secretary.
· PF Ltd will not have any vested financial interest and will not hold any shares in the company.
5) Can anyone have shares in my company?
· Yes, someone you know – friends, partners, parents etc. they do not have to be UK resident. The dividend should be paid out in the tax Year.
· Other shareholdings should not be greater than 10% and yes it helps your end of year tax bill. The overall benefit of share allocation[Form 88(2)] is shown when you complete your Personal Tax Return.
It is your responsibility to remember that Share Allocation is completed and documented along with Company's Annual Return.
· Prior to appointing these individuals, you will need to appreciate that they will have a stake in your company and may choose to have a say in the administration of your company.
6) What is required to open the new Business bank account?
Prior to visiting your chosen bank you will need the following documents -
· Certificate of Incorporation (we would e mail this to the Director)
· Memorandum and Articles of Association (we would e mail this to the Director)
· Letter from Company Secretary - confirmation of their appointment (only if PF Ltd is nominated as Company Secretary, we would e mail this to the Director)
· Two forms of original identity documents for example passport, driving license and utility bills. Non EU person will have to take their passport
7) How will the Personal Service Company operate?
· The Director will send their weekly time sheet directly to their Agency.
· On behalf of the Director we will generate an invoice - we will require on week ending (Sunday) basis either by phone, email or fax – Agency name, Hours worked and Hourly rate.
· We will e mail the invoice to both – Recruitment Agency and to the Director.
· The Agency will pay this invoice to the Director's Business Bank Account DIRECTLY
· It is the Responsibility of the Directors to inform Pinnacle Freelance Ltd on receipt of the money from their Agency.
· We will then Process your invoice to Calculate Tax Liability and email to the Director a Pinnacle Freelance Accounting service invoice and a Statutory Tax Deduction statement
· It is the Director’s responsibility to Pay Pinnacle Freelance Ltd, both - Statutory Tax Deductions (to Inland revenue) and the Pinnacle Freelance Invoice.
· Directors should send their business bank statements to PF Ltd on a monthly basis to enable latter to verify income and to file Annual Company Accounts without any delay.
8) How and when do I make payments to Pinnacle Freelance Ltd?
Payment can be done by either any one of the following methods.
Cheque - payable to Pinnacle Freelance Ltd or
Pay directly into our Company bank account via internet banking.
Piannacle Freelance Ltd . Acct No: 40 35 43 17 . Sort Code : 20-65-82.
Always quote for reference - INVOICE number for example 22 #65.
Directors should pay the Accounting Service Invoice within 7 working days along with Statutory Tax Deductions.
Payments to Pinnacle Freelance should be made on a regular basis as invoices are processed.
9) As a Director how can I withdraw money from my Personal Limited Company?
Income earned can be withdrawn from your company by 3 methods:
1) Salary 2) Dividends 3) Mixture of both – salary and dividends
· The amount withdrawn as salary you will have to pay Personal National Insurance and Income Tax (PAYE), approximately 32%.
· The amount withdrawn as dividends you will only pay Corporation tax
(in 2007= 20%, in 2008 = 21%).
· As a Director, you can choose not to allocate any of your income as salary for the whole year and not pay any Personal tax and NI contributions
· You can opt to withdraw minimum salary and maximum dividends. These amounts can vary from week to week.
· You can decide to allocate a percentage of your income as salary at the accounting year end.
Voluntary National Insurance Contributions (Class 3) – You can make a single payment at the end of each financial year. Class 3 is a fixed amount; such a payment will enable you to maintain your entitlement of state pension.
10) How often would I have to pay the PF Ltd Invoice and Statutory Deductions?
· PF Invoice will need to be paid immediately on weekly basis - you can opt to pay monthly as one off total amount.
· Statutory deductions will need to be paid simultaneously with PF Invoice, however if desired one can opt to pay this annually. If this amount is not paid in time Inland Revenue will levy interest and have the right to pursue this tax amount from the Director.
11) What expenses can be claimed?
· All expenses claimed should be relevant to your work and your profession/work related.
· You will be required to fill the expense and mileage claim forms and submit this to us on weekly basis.
· We will require copy of the receipts
For further details on list of expenses claimable visit our website www.pinnaclefreelance.com
It is not advisable to have the car in company's name because it would cause more tax problems
· If you send money home, it will be considered as your personal drawings
· You cannot have the utility bills in your business name, unless the property is business premises only.
· You can register mobile contracts under company name and claim it as an expense.
· If you read our FQA there is a link for inland revenue, where you will get more information
What other approved expenses can I claim besides related to my profession?
· Refer to HMRC guidance(Ref-BIM47825) which gives examples about other expense claims such as heating, electricity and external redecoration.
· A proportion of your costs can be claimed provided certain criterias are met, for example the area of the home is used exclusively for business purposes for a prescribed amount of time.
12) Does the Director need to contact Pinnacle Freelance Ltd every time they change the recruitment agency?
· Recruitment Agencies require Limited Company details prior to any payment
· Yes, we need to know the Agency name and contact details.
· PF Ltd. on the Directors behalf, would forward to their Recruitment Agency details of the Limited Company.
13) Will you be liable for any extra tax at the end of the year?
· No, not if your earnings are less than £40,835 per annum
14) What if my gross earnings per annum are over £40,835?
· Based on gross dividends and gross salary. You will be liable to pay surplus tax above this threshold. We would correspond to all high rate earners in October of each year.
· A precautionary advice would be, to safely keep 22.5% of the dividends earned, to allocate towards any Surplus tax (only if required). We will not know the exact amount until the financial year end.
15) Besides the Personal Allowance (£6035 pa), is there any other tax allowances to the Director?
· No other tax allowances available to the Director, but various methods of reducing tax.
16) Will you need to complete a tax return form?
· As Company Director you will have to complete a tax return form at the end of each tax year prior to 31st October or 31st January.
17) What is UTR Number?
It is a Unique Tax Reference, required by anyone who needs to complete the tax return.
Proceedure to obtain UTR:
· Call Tax Office Helpline - 08456055999
· Tell the office that you are the director of a limited company, drawing Dividends and salary which is below the threshold limit.
18) Can I close the company at any time?
If the company is never used
· At the end of the first accounting year, Companies House will automatically close the company at no cost.
· Company can be struck off anytime in the year at a cost of £10. Before closing the company, the bank account must be closed or else it will be frozen.
· If you wish to keep the Limited Company and not process any income/invoices then PF Ltd will file Nil Accounts at Companies House. You will need to pay £15 an annual charge to Companies House to keep this company.
If the company is in use
· It can be closed anytime you wish by putting in writng to us.
· Company can be struck off anytime at a cost of £10. Before closing the company, the bank account must be closed or else it will be frozen.
· Final accounts will be filed at the Companies House at no cost.
· To finalise the accounts we need companies bank statements.
· It will be the Company Director's responsibility to complete a Personal Tax return at end of the Tax Year.
· Personal tax return can be completed by us at the cost of £150.00(+VAT if applicable) or more depending on how soon the tax return is to be completed.
· If you do not wish to use your limited company bank account it can be closed as well
· Other accounting services there will be a minimum charge of £25.00(+VAT if applicable)
19) What documents will Pinnacle Freelance Ltd require from the Director to file their personal limited company accounts?
· Company bank statements. Any bank interest earned in a year. Other personal income. Personal bank statements. Other investments etc.
· Simple questionnaire to fill
· If required, to discuss tax planning over the phone or a personal visit to our office.
20) Is the team of Pinnacle Freelance Services Ltd able to deal with the legislation changes and are we competent?
· Yes. Our team comprises mainly of ACCA qualified members and able to provide the appropriate accounting service required.
· These staff’s are directly supervised by the Director who is a registered Chartered Accountant and Auditor.
21) What service does Pinnacle Freelance Ltd provides to their clients (Temporary workers / Directors)?
· Accounting service
· Invoices the Recruitment Agencies
· Weekly statutory tax deduction statement
· Process Expenses
· Advice on Tax planning and strategic Finance planning
· File annual Self Assessment Tax Return
· File annual Personal Service Company Accounts at Companies House
22)Year end required accounting adjustments, if necessary!
· From time to time the hours that you submit to us from your timesheets are not always the same figure as that which your agency holds and pays over to your personal limited company.
· Throughout the year, there may therefore be certain differences between the amounts your company receives and the amounts invoiced on your company's behalf. Any such differences will be reconciled by us when we prepare your year end accounts and accounted for accordingly
23) Where can I find details of my Personal Service Company?
· Full details of the Personal Service Company – such as appointed Director and shareholders along with Company Annual Accounts will be registered at Companies House.
· Proof of registration and further details can be downloaded from Companies House website at a cost of £1.00. (Follow Companies Appointment instructions.)
· Company Registered Address and shareholder details can be amended at anytime by filling the appropriate forms from Companies House.
24) Do I require Public and Employers Insurance for my Limited Company?
· Your company would not need Public Liability cover if you are the only employee in your limited company.
· You will be required to have Employer's liability cover. Please contact an independent insurance broker.