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Invoicing my own company

Looking for advice regards invoicing my own company for my self-employed services

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Hi there,

I am a marketing consultant, and have my own registered company (sole director, 100% of shares/control). If I invoice my clients as my company, am I allowed to then invoice my company as a self-employed individual (i.e. me)?

E.g. £100 invoiced to client company by my company, £100 invoiced to my company by me.

Or am I better simply trading as me (sole trader/self-employed)?

My worry is that HMRC do/will see this as avoiding paying employers contributions? Unfortunately I'm not knowledgeable in this area.

Thanks for your help.

Replies (21)

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By Accountant A
12th Oct 2019 16:40

chalkysbusiness wrote:

Unfortunately I'm not knowledgeable in this area.

Funny that; I'm not knowledgeable in the area of marketing.

The really good news is that in the same way that people pay you for giving them marketing advice, you can pay someone for accounting and tax advice!

https://find.icaew.com/

Problem solved!

Thanks (3)
RLI
By lionofludesch
12th Oct 2019 16:49

"My worry is that HMRC do/will see this as avoiding paying employers contributions."

A fear which is not unfounded.

Visit an accountant on Monday for an educational session.

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By adamsmith72
12th Oct 2019 17:13

Hi there,

I'm an accountant. People come to me for the best advice on how to structure their business.

They then pay me.

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Replying to adamsmith72:
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By chalkysbusiness
13th Oct 2019 06:36

I appreciate that. I came here for some upfront/gut feeling advice but perhaps the wrong place.

In my own profession I wouldn't expect to give all the answers for free, but I might be able to offer some initial thoughts on a given subject.

Thanks (1)
Replying to chalkysbusiness:
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By Clinton Lee
13th Oct 2019 10:48

I'm not an accountant (in the traditional sense), but I agree with the general sentiment on the page.

The "initial thoughts" you were hoping for are exactly what would be not in your interest because what you need are not initial thoughts; you need wider advice on the topic.

It's because you don't know what you don't know. A good accountant would read your question and understand that what you really need is advice on how to extract profit from a limited company (and do so in a tax efficient way, presumably). That's a much wider question and depends on a whole host of other factors individual to you and to your business.

If I came to you for some marketing advice would your "initial thoughts" be that I should go open a Google Ads account and set up a campaign? I should hope not. I'd get slaughtered and end up spending my annual ad budget in a day.

There are some occasions where the best initial thoughts are "go see a frigging expert".

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By memyself-eye
12th Oct 2019 17:33

I had (still have) a client who bought and renovated a house. He thought he should bill himself for his time. Didn't quite see that that 'income' would be added to his income as an architect....and taxed.

Maybe it's different in marketing - where anything is possible

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Replying to memyself-eye:
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By chalkysbusiness
13th Oct 2019 06:33

memyself-eye wrote:

I had (still have) a client who bought and renovated a house. He thought he should bill himself for his time. Didn't quite see that that 'income' would be added to his income as an architect....and taxed.

Maybe it's different in marketing - where anything is possible

I understand its income and will be taxed. That's not really the point of my question.

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Replying to chalkysbusiness:
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By legerman
13th Oct 2019 13:47

chalkysbusiness wrote:

I understand its income and will be taxed. That's not really the point of my question.

Yes, you asked about avoiding employer contributions. The good news is that there is a perfectly legitimate way of extracting funds from your Ltd Company without paying (well maybe just a smidgeon) of employer or employee NI.

Any good accountant should be able to help you, so start making some phone calls.

Thanks (1)
RLI
By lionofludesch
12th Oct 2019 17:40

When I see this kind of question, I immediately wonder - what has the OP not bothered to tell us ?

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Replying to lionofludesch:
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By chalkysbusiness
13th Oct 2019 06:28

lionofludesch wrote:

When I see this kind of question, I immediately wonder - what has the OP not bothered to tell us ?

Answer: nothing. I am seeing if there are well known ramifications to such a set up before I start trading as a company.

The tone of the responses suggests that I am better off invoicing as me.

Thanks (0)
Replying to chalkysbusiness:
RLI
By lionofludesch
13th Oct 2019 12:32

chalkysbusiness wrote:

lionofludesch wrote:

When I see this kind of question, I immediately wonder - what has the OP not bothered to tell us ?

Answer: nothing. I am seeing if there are well known ramifications to such a set up before I start trading as a company.

The tone of the responses suggests that I am better off invoicing as me.

Not suggesting you're trying to hide anything. Just that you might not have presented all the relevant inforfmation.

What seems crazy is that you'd invoice your company, saving 19% Corporation Tax + 7½% dividend tax in order to pay 20% Income Tax + 9% NI. That's before we consider the ramifications of whether you have a conflict of interest in that you're invoicing the company of which you are a director. And the additional compliance cost of running a company.

Basically, it's a lot of faff for the privelege of paying more tax.

Having said that, we don't know how much you expect to earn, whether you have income from another source, what your personal circumstances are, because, although you say you've told us everything, I can't find this information in the thread.

That's why we say see an accountant. It's not because we don't care. It's because we do.

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By Matrix
12th Oct 2019 18:27

I don’t really understand the point of running a company when you would be paying class 4 on profits extracted. Why did you set up the company?

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Replying to Matrix:
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By chalkysbusiness
13th Oct 2019 06:23

Matrix wrote:

I don’t really understand the point of running a company when you would be paying class 4 on profits extracted. Why did you set up the company?

To appear larger than a one person band / more professional.

Thanks for the responses all.

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Replying to chalkysbusiness:
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By Matrix
13th Oct 2019 07:40

That’s fine, but then make sure you use the limited company properly since you have completely got the wrong end of the stick if you think you invoice the company as a sole trader.

Engage an accountant.

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By lesley.barnes
13th Oct 2019 10:19

As others have said you need an accountant so they can look at your individual situation. It maybe a limited company, wages and divs are the way to go rather than Sole trader. Only an accountant looking at all your income and personal expenditure and aspersions can help.

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By chalkysbusiness
13th Oct 2019 11:18

Thanks for all the responses. I'll get in touch with an accountant and see what they advise :).

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Replying to chalkysbusiness:
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By paul.benny
13th Oct 2019 16:49

Credit to you for coming back and engaging with the responses.

There are fair few dumb/naïve questions posted here and often the questionners take offence and/or go to ground.

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Replying to paul.benny:
RLI
By lionofludesch
13th Oct 2019 16:53

paul.benny wrote:

There are fair few dumb/naïve questions posted here and often the questionners take offence and/or go to ground.

It's the folk who start hurling abuse because they don't get the answer they want that I can't do with.

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By memyself-eye
13th Oct 2019 15:47

You should have done that first.

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Replying to memyself-eye:
RLI
By lionofludesch
13th Oct 2019 15:53

Ach - that's bit harsh. Nothing wrong with checking out the lie of the land. If nothing else, it helps in forming the questions he needs to ask when he gets there.

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By bernard michael
14th Oct 2019 10:11

Ask yourself by what criteria am I self employed ? That should keep you happy in the winter months before you realise it's a non starter

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