The Benefits of Running a Limited Company for Veterinary Locums
Although the following benefits of running a limited company are presented with veterinary locums in mind, they also apply to anybody who is self-employed or considering becoming so. Forming a limited company is an alternative that few think about, largely because they are unaware of the possibility of doing so let alone of its benefits.

Let's say you are veterinary locum - what's the biggest problem you have got with regard to your income - apart from the amount of it?

Income tax - is it not? How do you pay it - will your veterinary practice take a locum onto their books and do you a favour by entering you into their PAYE system?

Likely not, because they might say it screws up their computerized system - in fact it doesn't, it just causes them more work! But nevertheless, they would rather not pay your tax to the taxman, but leave you to see to it yourself.

Nor will they be interested in your expenses - that's more complications for them, so you find it difficult to claim your various allowances for business subsistence and travel. That's why most veterinary practices will not want to handle your tax payments, but leave it to you.

But let's just say for a minute that Practice A who you work for now has agreed to do that, and pay your income tax via their PAYE system. Will they also pay your National Insurance? Will they heck! To do that would cost them money, because they would also have to pay their employer's contribution. So your tax is being paid but not your stamp, and you will have to pay that yourself in any case.

Now let's say your contract expires and you go to Company B. They refuse to put you on their books, and regard you as a self-employed contractor. Where are you now? How difficult is that going to be for your income tax!

You would have to explain that one company paid your tax through PAYE and another didn't, and you have to keep separate accounts for those that do and those that don't! And keep tabs on your NI payments! A total nightmare!

Now consider a different scenario. You make yourself a limited company with the help of a lawyer or accountant friend - or pay to have it done (it's worth it in the end). No matter who you work for, you take note of your income and expenses. You can pay yourself a salary so that you pay the minimum of income tax, if any at all. The rest goes into the company (you) for corporation tax.

In 2011 Income tax is 20% up to £35,000 and 40% over that. Corporation tax when you are making less than £300,000 is 20%. So not only can you pay yourself enough to keep yourself in the lower tax bracket, but the company is taxed at only 20% for the rest, and not 40%. That can be a significant savings for a locum vet earning more than $35,000/year.

That is just one benefit. There are more! You can pay your National insurance automatically each month without having to wonder when you were and weren’t working for an employer.

And yet more: as a limited company you can claim for your car, fuel and travel necessary for business, accommodation and meals while working away from home and all equipment and clothing needed to carry out your work. Telephone calls and postage in connection with getting the contract with the practice and while working as a contractor for it. You therefore have significant advantages over working for a veterinary practice that pays your tax via PAYE.

It also offers significant advantages over becoming self employed, because then you would have to pay the higher tax band at earnings over $35,000 each year.

Another advantage is credit! Many don't think of this, but if you a car loan or any other form of credit being self-employed can be a problem, and a locum is regarded as temporary work - even worse. However, if you can state that you work for a limited company, then you have no problems.

What are the other options? Very few, but let's consider an umbrella company. That's an arrangement whereby the umbrella company gets paid by your practice and then pays you less tax and an administration fee. They will not permit much in the way of expenses, and umbrellas are popular only with locum vets that have no imagination and want things made easy for them.

If you intend carrying out locum veterinary work for a few years then you can pay significantly less tax over that period - more than enough to pay the accountant and still gain a great deal relative to an umbrella or having the practice deduct your tax.

These are just the more obvious benefits of running a limited company for a veterinary locum There are likely a few more , but these are sufficient to prove the point that you are better forming yourself into limited company than pleading with a practice to put you on their books for tax purposes.

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