Self employed - Employed issues - please help! - The Book-keepers Forum (UK)

catcat · Member

Self employed - Employed issues - please help!

Sue T · Veteran Member

Hi Catherine - basically yes to all the above. My PI was around £100 after much searching on the internet and this was for around £50,000 of cover. MLR with HMRC around £120 I think.
I personally would keep your other jobs as an employed status as you don't know if this new job is going to be successful. If the new people are seen to be flouting the employment rules according to HMRC ie they should have employed you, they will get penalised.

Hope this helps.

Sue

-- Edited by Sue T on Friday 5th of March 2010 11:03:45 PM

RobH · Expert

Hi Catherine,

in addition to what Sue has said, if the new people insist on the job being taken on as self employed, I would want to ensure you are getting around 20% more per hour than the employed rate in order for you to cover your additional costs, loss of holiday entitlement etc. On the hours you are doing there won't be much of an NI saving (if any) for the employer so if you asked them why they want to do it that way and they mention employers ni explain that it would count for very little. Alternatively get them to pay your PI and MLR costs.

catcat · Member

Thanks Sue & Rob.

So - will I need PI even if they have "an accountant" who puts together the accounts. I don't have a practicing certificate as all I am going to be doing is "basic bookkeeping" as that is all I'm allowed to do according to the ACCA (bless their cotton socks). So as no 3rd party will be relying on what I do, do I really need PI? After all, the accountant is going to prepare the accounts based on my bookkeeping - that is all.

Have to say, from looking at HMRC website I would have thought that I should be taken on on an employed basis (from looking at the Employment Status Indicator thingy-what). I do wonder if they are labouring under the mis-apprehension that if they go self-employed it will be a lot cheaper for them as I can't see that there is going to be any employers NI at all.

I'm looking to it as a stepping stone into something a bit different - but as they have dithered massively over paying £15 an hour (despite having a bookkeeper in the past who made such a mess of things that they had to re-do 7 months accounts - the old adage about monkeys and peanuts springs to mind) - I can't see that they are gong to cough up for PI & MLR for me.

Thoughts?

Thanks

Catherine

Shamus · Forum Moderator & Expert

Hi Catherine,

It's not just for N.I. that you don't take people on directly. There's employee rights including maternity, paternity, sickpay, holidays, pensions, training, etc.

As self employed that's all down to you. Plus of course if you mess up as a permie you get a slap on the wrist but if you mess up on a self employed basis then you can be sued.

Sounds as though that might have gone through their mind if they had to reenter 7 months worth of data before!

You work will be covered by the supply of goods and services act (1982) so if work falls short of the expected standard you will be expected to rectify it at no cost or compensate for the errors made.

PII is pretty much essential and you cannot assume that the accountant will take the rap for any errors that you might make which is what you seem to be suggesting in the statement about no 3rd party relying on what you do and the accountant preparing the accounts.

As you know from the ACCA it's actually basic bookkeeping to trial balance, VAT and Payroll unless you are supervised by someone suitably qualified. As there is an accountant involved you may be able to take on more responsibility provided that they review everything that you do. In that instance it will also count towards your experience requirements for the ACCA where most freelance work does not.

In short though. MLR is mandatory and I would advise that PII is essential.

kind regards,

Shaun.

RobH · Expert

Yes a tough call on this one, as Shaun says MLR is mandatory and then it's up to you whether you 'wing it' onthe insurance. It is tantamount to self-insuring, ie you put right any mistakes made at your own cost, but probably if there are any problems you would just be 'let go' which would be the case if you had PI or not. Of course you have to weigh up whether you could be held culperble for anything more serious but I would think that is unlikely. Let us know your decision.

catcat · Member

Just having a quick look at MLR on HMRC website (nice Sunday night viewing). The business which wants me to do their books on a self-employed basis is regulated by the FSA. I'm sure you're going to say that the fact that it is so regulated does not mean that my "business" of doing their books for them need not be registered under MLR. Does it?

My husband suggests to "wing" it on PII and MLR... but there we are - he's not an accountant! I think if I want to do more on this route then maybe need to register on both!

Catherine

Shamus · Forum Moderator & Expert

Mmm, wing it... You do realise not being registered carries an unlimited fine and a prison term of two years don't you! (or up to 14 years for some offences).

Even if as Rob suggests you run the risk of losing thousands for the sake of £100 or so for PII, You must be registered for MLR. It's not optional.

RobH · Expert

Catherine,Shaun is absolutely right, do not 'wing it' on the mlr.

catcat · Member

Thanks Shaun - good point well made! I'm going to wait until I meet with the company & then I'll kick off on the MLR and also check out the PI situation. I got a quote online for PII £60 for a year (based on £5K turnover which I'll be well under for the moment) - so should be able to do the lot for around £200 which doesn't sound too bad I guess.

Thanks for your help

moonfish · Newbie

Hi all, This is my first post on this forum & have been reading this thread with interest as I am in a similar position myself i.e just starting up as self-employed bookkeeper.

I am especially interested in PII, can anyone point me in the right direction of where to go to get PII & how much I would be looking to pay? I am only looking to be working approx 16 hours per week so my turnover would be minimal.

I am also interested in any other 'legal safegaurds' I may need to look at? The actual bookkeeping aspect of starting up on my own does not faze me but the prospect of being sued does! - is this a common occurence & in which ways could I be most vulnerable?

I dont want to let this get in the way of me getting started but I do want to be aware..

Your thoughts on this would be greatly appreciated!

Wella · Expert

Hi Moonfish and welcome

With the PII it will depend on what you tell them your expected turnover will be, the higher the turnover, the greater the risk for them.

I have mine through Trafalgar (via ICB) this year I optimistically put £15K (live in hope!)turnover which cost me £80.

Plus you have the registration fees for Money Laundering Regulations, which are currently £120 for direct registration with HMRC (Cheaper if you are with an approved bookkeeping/ accounting body)

Bill

Neil · Senior Member

Hey Bill

Using the same figures at Trafalgar I get an instant Quote of £ 114. I take it you haven't included the "IPT of £4.00 and also a £30.00 policy fee."?

Cheers
Neil

Shamus · Forum Moderator & Expert

Morning Neil,

What £30 policy fee???

My PII with Trafalgar cost me £96.00 plus £4.80 IPT with them for £50,000 on £20,000 turnover.

I also had a quote at the time £5000 turnover and £50,000 cover and it came out as £45.00 plus £2.25 IPT.

Shaun.

moonfish · Newbie

Thankyou Wella much appreciated!

Just a query re MLR - is a fully qualified accountant automatically covered for MLR or would they still have to register as an individual with HMRC? I am a lapsed AAT member so I guess its the cost of re-instating my membership vs the reduction on MLR!

Neil · Senior Member

Shaun

Could you tell me how you got your PII with Trafalgar, i.e. how you accessed the site? I hope this isn't another ICB-related rip-off.

Cheers
Neil

Wella · Expert

Nick

If you go to Members Area/ Members Benefits/ Click Here to visit ICB Plus website that will click through to a different website. Accept the T&Cs and that will let you view various promotions, go to insurance and that will lead you through to Trafalgars site. You need to be qualified to the relevent stage. Once you have your insurance you then apply for you Practice Licence and Trafalgar confirm with the ICB your cover.

Moonfish

MLR registration is mandatory, regardless of qualification. You need to be a member in practice of a regulated body or direct with HMRC. There are various due diligence procedures you also have to follow, for each client.

Bill

-- Edited by Wella on Friday 12th of March 2010 12:24:46 PM

Shamus · Forum Moderator & Expert

Hi Neil,

sorry for the delay. Studying at the moment so not on here all of the time.

In addition to Bills reply.

I just went onto the Trafalgar website :

http://www.trafalgar.uk.com/

and clicked the ICB professional indemnity tab then played around with the prices and options.

I didn't go for the employers and public liability option as I already have that through Direct Line for the banking side of my business.

In my case it's the same company. I checked the policy wording and I'm fine the way that I'm doing it... Yes, I really am that sad that I read the small print in insurance policies!

Moonfish (whats your first name by the way. Moonfish sounds so 60's like starchild!).

You've hit the nail on the head. It's either cover via MAAT MIP or HMRC direct. If your lapsed AAT you may find HMRC direct the cheaper option.

Cheers,

Shaun.

Neil · Senior Member

OK, I went to

https://www.trafalgar.uk.com/asp/icb-professional-indemnity.asp?a=0&useDef=1&sp=icb&r=0&clForm=27&fID=0

I played around with the values and got:

1,000 -   5,000 turnover, indemnity up to 100,000: £   73.50
5,001 - 10,000 turnover, 50,000 indemnity :           £   86.10
10,001 - 15,000 turnover, 50,000 indemnity:            £ 114.00
5,001 - 20,000 turnover, 100,000 indemnity:          £ 164.40

None of these seem to match the values others have mentioned but are they decent prices?

Cheers
Neil

Shamus · Forum Moderator & Expert

Just tried it myself

standard cover
Limited Company (came out same for sole trader)
£50k cover
Employee's 1

£5000 turnover £47.25

£5001 turnover £86.10

So would make sense to set turnover at £5000 then up your cover if you get close to hitting that.

First year is always difficult so you may find that your turnover is considerably less than you expect.

Wella · Expert

I suspect there has been an increase in premiums my policy was taken out September.

Just tried myself and it came out at £114.

I agree with Shaun, I was totally unrealistic in my first year and it doubled my premium unnecessarily. Even this year, I will not reach the estimated turnover.

Neil · Senior Member

Not sure how I missed the lowest one but I have gone for that. Cheers, chaps.

Neil

-- Edited by Neil on Friday 12th of March 2010 02:21:01 PM

moonfish · Newbie

Thanks Bill & Shaun!

Its Jane by the way!!

One more thing - once all my new clients are beating on my door demanding that I do their bookkeeping for them (heh!) i will be doing contracts stating my charges, hours of work, notice period etc is there anything else I should include to safeguard myself eg 'I will only do x,y & z & anything else over & above this to be confirmed in writing'?

Thanks

Jane

Shamus · Forum Moderator & Expert

Hi Jane,

all depends how you work. From your description of what you expect it sounds like contracts of employment but on a self employed basis we tend to use service contracts and engagement letters that give basic details of the relevant expectations of both parties (which I find helps to clear the mind of the client that we are bookkeepers, not accountants!).

A service contract will state the services that you are supplying such as bookkeeping to trial balance.

Try to avoid putting a number of hours unless you are working on the clients site and even then use it with care as they'll try to beat your charges down if you finish work ahead of schedule.

Got to do the school run now but I'll come back to this later as there's a fundamental difference in mindset between employment and self employment. For example, holiday don't exist anymore, they're just periods of enforced non payment!

I'll be back.

Shaun.

Shamus · Forum Moderator & Expert

Hi Jane,

Just thinking some more about the way that you phrased your statement about contracts.

this is just general advice rather than a continuation of the thread from above. Also the following are my views and may not reflect the views and experience of others on the site.

Think that I can see the way that you're looking at this which is basically working on a temp type basis.

I think that it's a mind set thing that takes a while to get into that going forwards you will be working with clients rather than for them.

Whilst we may charge on an hourly basis we tend to quote for the job. For example. if we think that a job may take 2 days a month we quote (taking the clients financial situation into account) based on 16 hours of our time. But whether the job takes 8 hours or 24 we tend to stick to the quoted figure as the client is paying for (and budgeting for) the job, not the hours (that's providing any extension in time is not down to the client moving the goal posts or problems with their computer system and/or availability of data).

Note that if you try to win work based on lowballing you may end up shooting yourself in the foot as (a) it may be that no further work is given to you and (b) if further work is offered they will expect it done on similar terms to the original contract.

Of course, another approach that some people have is to work on a freelance basis taking one or more temp jobs. This has all of the traits of being employed by the client without any of the advantages such as sickpay, holidays, training, etc. so if you go down that path make sure that the price you quote takes such factors into consideration.

Shaun.

catcat · Member

HI Shaun / Jane

Just reading the latest posts with interest. So I've agreed on a new "job" for 2 days / month (their estimate) @ £15/hour. I applied for this through an advert from a job agency and, notwithstanding the argument about whether it is really a job rather than a self-employed thing (HMRC website suggests job, company is wanting self-employed route), I'm looking on this as the first of many (fingers crossed) and so self-employed is OK (whilst not probably correct).

Was wondering if I should do some sort of contract or letter of employment. I can see the upside of saying that it'll cost them £x pcm to do what needs to be done - and if I'm efficient and quick then it will take me less time and I'll be happy. But the 2 days per month is their estimate, I haven't seen what needs to be done, and so I don't want to agree so a sum on a pcm basis without seeing what's involved first.

I think they think that effectively I'm going to be an employee costing them £15/hour and I'll work what hours it takes and they don't have the staff "overhead". But that's a bit of a losing situation for me isn't it (or isn't it encouraging me to be inefficient)?

So what should I have done? Gone to see them, price what needs to be done, give them a price and they accept or reject it. But with the £15/hour conversation (via the job agency) at the outset I was on to a bit of a 3-legged donkey me-thinks.

Comments & helpful advice please!

Thanks

Catherine

Shamus · Forum Moderator & Expert

Hi Catherine,

sounds like you agreed to an hourly rate but you never agreed to how many hours that the job would take to do.

The client will no doubt base the time on someone who has been doing the job for months and can do the role without thinking about it.

You need to review the work and make a sensible judgment on the length of time per month that you believe that it will take.

If you feel that it will take two days after a bedding in period then perhaps suggest three days per month for the first three months then two days per month there after.

Unfortunately as a self employed bod your only option is walking away from a contract if you do not feel that you can do what the client wants and still make a profit.

Your asking for an additional three days (£360) will also go some way to make up for the added expenses that are going to have to be born by being self employed.

I like the line about encouraging you to be inefficient! In bank contracting there's an old say.

"Do it right first time and get job satisfaction. Do it wrong a dozen times and get job security!".

Hope the above helps,

Talk soon,

Shaun.

Amanda · Expert

Hi Catherine,

I did something similar on site, and it was 15 hours per wk. I thought that was OK, fitted in nicely with other peoples books I was doing. But heres the BUT, it later transpired when I couldn't do all the work in the short amount of hours, that it was actually a FULL-TIME job 35 hours but because they couldn't find anyone through the job agency and saw my advert for a freelance Bookkeeper, I told them I only could do part-time as had others and they said thats OK, not a large job. They didn't tell me that the person before me was FULL-TIME and had left because she couldn't do it as Full time and really needed an admin person to help.

It was another colleague who actually sat in on my interview that actually told me sometime after the event, that she couldn't believe it when I was told at the interview that it was fine to do just 15 hours per week. (She knew it should have been alot more).

Anyway to cut a long story short, I don't work there anymore as I could not give them more hours as already committed. So just be careful, sometimes companies aren't always what they say they are. If I had looked this one up on Companies House, I certainly wouldn't not have touched them with a barge pole. Its not till you start to unravel things that you get a true picture, they told me everything was up together, but it was an utter mess!!!! They've not had a proper Bookkeeper since I left and that was over a year ago! So I'm sure you can imagine the rest!

I would ask if they had a previous Bookkeeper and ask what hours they had done in the past, that way you might be able to gauge it better then just relying what the agency tell you. After all you don't want to shoot yourself in the foot and work more and then not be paid!!! (I was paid for all of mine so that was not a problem)

It does also seem that they want you self-employed so they don't have to pay NI and TAX or hols pay etc. Just make sure you can work what days that suits you not necessary them. If they are rigid then it sounds like you should be employed. Its a difficult one, one that I have learnt a lesson from.

I do work on site at 2 different peoples houses/office at their house, as well as at home, one of those is a regular and its twice a month, just for a few hours, but he is totally flexible as to which days it is, which is nice for me, the other one is about once a month, although that client is really small. Hope you get it all sorted out and who knows it might be OK.
Good luck with your decission.
Regards
Amanda

-- Edited by Amanda on Friday 12th of March 2010 10:51:25 PM

-- Edited by Amanda on Friday 12th of March 2010 10:53:36 PM

catcat · Member

Thanks Amanda (& Shaun). Sounds like a nightmare drowning in work!

I'm not sure that they know how long it will take as it had all been set up on the system wrongly at first, and so they have spent a lot of time re-doing it all and it's only just about up to date again. They seem fairly flexible so far - I told them when I could come in and they said OK - their only requirement is that I come in before around the 7th of the month as they have some statutory deadline then.

From what you have said I think I need to have a chat to see what their expectations are and how they fit with mine. I suspect that they will say that they will pay me for as many hours as it takes... which might suit me quite well at the moment. However when I mentioned to them in passing that the agency had said that it was for 2 days per month, the client said "who told you that?" - so there's my starter for 10! I have to say from what she showed me when I went it, I couldn't see it was going to take more than about 3 hours a month! - but maybe she wasn't showing me everything!

Ho Hum

Catherine

Shamus · Forum Moderator & Expert

Morning Catherine,

there's an old adage about agents.

Q: How can you tell that an agent is lying to you?
A: Their mouth is moving.

Sounds as though you've dropped on quite an interesting role. Before rejecting it because they want too much of your time is there any way that you can give it more time by rearranging the rest of your commitments?

As you say, you need to talk with the client to find out what the work is and what their expectations are.

Word of advice. Try not to alienate the agent as they are the ones who will be finding your next job. We know that they lie to us but pretend you don't as it keeps them sweet.

Try to give the client whatever they want. Go to them with solutions rather than problems as that's not why they are drafting in an expert.

For example, does ALL of the work have to be done on site? Is their site open seven days a week and if so is there more time that you could commit on their site then? I appreciate that you are trying to work around two other permanent roles as well.... Of course another thing to look at is your commitment to two permanent roles? How permanent is permanent? If either of them is likely to be pulled any time soon it would be foolish to lose business income in a role that may last longer and be more lucrative than the permanent role! If this sounds like the case why not give the permie role the push to free up more time for your business?

Personally I had a temp (contract) role that lasted for 8 years and I've had a permanent role with a major blue chip bank where my secure for life job was outsourced after six months!

Think outside the box but whatever route you take go with your own gut feel, not what other people advise you to do. You'll find that invariably you will be the one who is right.

kind regards,

Shaun.

-- Edited by Shamus on Sunday 14th of March 2010 11:14:09 AM

catcat · Member

Thanks Shaun - some very helpful points as ever. Am seeing the client on Wednesday morning so before then I'll piece together where I'm coming from (!) and then we'll see how it goes. From our previous meeting I had a strong desire to restore her faith in the bookkeeping/accounting community and to prove that there were some professional knowledgeable people around (that's me by the way!) who could run their books in the way they should be. I think it will be an interesting role (well more interesting than my other one anyway) - and I have already investigated addiitonal childcare if it turns out to be bigger than advertised. I'm certainly not rejected it - it's a 10 minute walk away and that kind of thing doesn't come up often!

Thanks for all your comments

Catherine

Amanda · Expert

Hi,

The more local the better especially with childcare, all mine are local, either 5-10 min walk or 5 mins in the car, so very lucky in deed.

Goood luck on Wednesday

regards
A

moonfish · Newbie

Morning,

Shaun, thanks for the advice it was really helpful & you totally got where I was coming from - it is a terms of engagement that I am talking about as opposed to contract of employment.

Self employment is definetley the route I wish to go down as then I can be more in control of when/where I work but agree it is difficult to get into that mindset. All the other stuff was great advice too esp about going in with low price. Also liked the comment about 'do it wrong & get job security' I think I have worked with a few of them in my time!

Catherine, good luck I am sure you will make the right call & let us know how you get on.

Jane