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What's the best way to charge for consulting?

How to charge for consulting work done outside of day-to-day running business

I own/run a small internet-based business. While I'm growing this business I will be starting some ad-hoc due diligence consulting work to pay bills & fund the business. I know some of you are quite experienced in this field, so would love some advice on a couple of questions I have.

  • Is there any reason not to invoice for the consulting work via the same limited company that I run my small business from? I am the sole owner/operator of that business and it will be very easy to separate the finances in management accounts
  • Do I need to worry about IR35? I believe I don't come close to falling into IR35 - I'm using my own equipment, managing my own time, working on discrete projects/pieces of work & mostly working from home. On the other hand, I am charging a day-rate, they wouldn't expect substitution & I will have to attend face-to-face meetings once or twice a week at the client's office. I will only be working for one client, but will be balancing this with running my own business.

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24th Oct 2017 10:08

Your accountant can surely answer these questions for you, as he or she will know your business circumstances far better than we do.

If your accountant is not able to advise on these points then you may need to find a new accountant.

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By mimil
24th Oct 2017 10:20

Thanks for the response. I am an accountant (should probably have mentioned this in retrospect)

My opinion is that I am fine to have effectively two businesses operating out of the limited company (consulting & the internet business) as I'm 100% shareholder & that I am not in scope for IR35

But given that other accountants have more experience than me in these fields I thought it couldn't hurt to see if anybody had another opinion on here

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24th Oct 2017 16:36

Is the Ltd Co VAT registered?

If it isn't (for example because it's below the threshold) would adding the turnover from the due diligence business take it over?

If they are two distinctly different trades then they would each be assessed against the threshold separately if one was a Ltd Co and the other a sole trade.

Is the Ltd Co going to be paying you a salary ? If not, the profit from the due diligence work could be a nice way of ensuring you use your personal allowance every year and pay some class 2 NIC toward your state pension.

There will be ways and means of structuring your contract for the due diligence work to prevent you falling foul of IR35. You need to ensure these are rooted in reality though in case HMRC come asking questions further down the line.

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