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The freelance engineer - self employed or register as a company?

Andy Millar

Hi,

My retirement is fast approaching, but like most consultant engineers there's a good chance that I'll be appreciating the chance to do some freelance work in retirement, particularly in the winter months! I wondered what the team thinks about the relative benefits of going self-employed or registering myself as a company?

I won't be employing anyone else, 99% will be office based (mostly my back bedroom). Tools and equipment will be minimal, laptop, and possibly a multimeter if I get a chance to see some actual technology (I can dream). I would imagine I'll only be working for UK companies, I'd suspect any overseas work would come through UK companies i.e. I'd always be contracted to the UK entity. I wouldn't have any outgoings except travelling expenses.

I will almost certainly mainly be working for large (sometimes very large) organisations, an ex-colleague who went the same path did find that being a registered company made the contractual arrangements with some of these easier. 

There is some risk that I could find in one year that I'm only working for a single client, which as I know from my present side of the fence can be a pain to prove as to whether this is actual self-employment. Presumably being a registered company protects against this? (I really ought to know the answer to that one. I would have done back when I was a full time manager.)

Any other pros or cons of either for this type of work? Obviously self employed is much the easier! I help my wife run her self employed business, and my son run his "sole trader" registered company, so I'm pretty good on the mechanics of both approaches. Including chasing my son every year when the letters come to our address from Companies House nagging him about his annual returns...

(P.S. as somebody will probably mention it otherwise, I already have personal liability insurance set up, I got it for the volunteer engineering work I do. I'd just need to check the limits.)

Any thoughts, particularly from those who've "been there, done that", would be greatly appreciated! Not least as I'll bet I'm not the only one here thinking about this, so if there's any advice not relevant to my situation it will probably still help someone else.

Thanks,

Andy

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    As someone who has sat on the company side, the assessments I've been involved in for the IR35 side have not focused on whether its self-employed or a company. They have generally focused on if the person is responsible for their work, if they can work at their own location, if they can substitute the person working or not (are you buying a person or a service). Some people say using your own equipment is important, but due to corporate security policy, that wasn't possible and the use of corporate IT was accepted in our case. But you may have seen different approaches. I suspect no company does it the same.

    The friends I have the contract generally set up companies. The only exception I've seen is someone contracting within IR35 and they stayed self-employed (but charged eye-watering rates).

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    As someone who has sat on the company side, the assessments I've been involved in for the IR35 side have not focused on whether its self-employed or a company. They have generally focused on if the person is responsible for their work, if they can work at their own location, if they can substitute the person working or not (are you buying a person or a service). Some people say using your own equipment is important, but due to corporate security policy, that wasn't possible and the use of corporate IT was accepted in our case. But you may have seen different approaches. I suspect no company does it the same.

    The friends I have the contract generally set up companies. The only exception I've seen is someone contracting within IR35 and they stayed self-employed (but charged eye-watering rates).

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