Accountant for Freelancers in Hither Green & Lee

What we help freelancers with

• ✓ Deciding whether to stay a sole trader or set up a limited company, with the numbers worked out for your income
• ✓ Setting a director's salary and dividend plan that fits the tax year, not just last year's habit
• ✓ Your personal Self Assessment return, including dividends drawn from your company
• ✓ Year-end accounts and the Corporation Tax return for your company
• ✓ A straight answer on whether IR35 is something you need to think about with a particular client

Sole trader or limited company?

This is the question most freelancers in SE12 ask us first, and the honest answer is that it depends on your profit, not your turnover. As a sole trader you pay Income Tax and Class 4 National Insurance on your profit, file one Self Assessment return a year, and the paperwork stays light. A limited company pays Corporation Tax on its profit, and you then take money out as a mix of salary and dividends, which can leave more in your pocket once profits get high enough.

The saving isn't automatic. A company brings its own costs: annual accounts filed at Companies House, a Corporation Tax return, a confirmation statement, usually a payroll for your own salary, and the fact that the company's money isn't yours to spend freely. At lower profit levels those costs can wipe out the tax difference entirely. We'll run both options against your actual figures before you commit either way, and if staying a sole trader is the right call, we'll tell you so.

Paying yourself from a one-person company

Once you're a director, what you pay yourself is a decision, not a default. Most single-director companies pay a modest salary and take the rest as dividends, because dividends don't carry National Insurance. Where exactly to set the salary depends on the thresholds for the tax year and on whether anyone else is on the payroll: a company whose only employee is its director can't claim the Employment Allowance, which changes the maths compared with a business that has staff.

Dividends can only be paid out of profits the company has actually made after Corporation Tax, so taking "dividends" from a company that hasn't made the profit creates a director's loan instead, with its own tax consequences. We keep an eye on that through the year so the drawings you take are ones the company can support.

IR35, briefly

If you contract through your own company, the off-payroll working rules (IR35) decide whether HMRC treats an engagement as employment in all but name. For medium and large clients, the client makes that call and tells you. For small clients, the responsibility stays with your company. We won't pretend to give a formal status opinion in a paragraph, but we'll flag it when a contract looks like it needs a proper look.

Common questions

Freelancer questions, answered.