How to differentiate Business and Personal Services on Law Firm Websites

Ever since 6 April 2021, the same has applied in the private sector, with end users determining whether the role they are seeking to fill falls inside or outside the IR35 criteria. If you’re considering setting up a personal service company, or already operate in this way, Handpicked Accountants can help. We’ll provide reliable referrals for qualified accountants in your area, based on longstanding professional relationships and extensive knowledge of their specialisms and working practices. The phrase ‘Personal Service Company’ was first coined in 2000, when the IR35 legislation was brought into force. HMRC used it to describe a limited company formed to deliver the services of a single contractor, who tends to be the only shareholder and director of the business. Personal service companies are most commonly used for contract jobs, as many recruitment agencies and clients, will not hire self-employed individuals unless they own their own limited company.

It is relatively straightforward to set up a limited company – especially if you appoint a contractor accountant – and you can be set up in 24 hours. PSCs have a tax-efficient pay structure in place as income can be drawn from the company as salary and dividends. This means that employers or employees Class 1 National Insurance will not be due on a large part of their income.

bussines personal & service

That’s because they simply do not want all the hassles and expense that come from hiring an employee. So, by using a contractor’s limited company in a contract for services, clients are effectively highlighting that they do not have and do not wish to have an employer-employee relationship with the contractors. If you’ve had enough of juggling spreadsheets and never finding the right invoice, your business needs Crunch’s free accounting software, whether you are a freelancer, sole trader or limited company. We are the UK’s most cost-effective online accounting service, with an award-winning Customer Service team and Chartered Certified accountants. When working as a contractor, you may find that some clients and recruitment agencies prefer to work with limited companies rather than unincorporated sole traders.

Running a business

There is no single definition of the term Personal Services Company , which was coined by HMRC to describe companies which are set up so that individuals can offer their services via the medium of a company, rather than in a personal capacity. I was captain of my rugby 7s team at school, organising fitness sessions and maintaining morale and motivation. I was school boarding house representative for the gym, dealing with all issues connected with fitness and offering advice on nutrition and weight-lifting techniques.

  • Here at Qdos Contractor we have handled well over 1,600 IR35 enquiries on behalf of UK contractors, saving them over £35m in tax.
  • In the first of a two-part article, Peter Rayney explores how to close down a ‘personal service’ company tax-efficiently.
  • Seeking advice from an accountant who specialises in this area offers reassurance that you’re not falling foul of UK tax laws, and that you’re also running a business that’s tax-efficient.
  • Limited companies are generally considered to appear more professional as they have their own registered company name.
  • In trying to provide the best content and the user experience on a website, a common problem faced by law firms is how to best define and differentiate between services aimed at business clients and private clients.

Both company types may also need to pay VAT and submit quarterly VAT returns to HMRC depending on income. Although both types of companies normally have a single owner or director, the difference is how they register their company in the UK. With three comprehensive packages and a number of add-ons, we can equip you with everything you need to help you ride the waves of contracting. Low-cost, fixed fee services with your own dedicated accountant & FREE Company Formation. As a result of IR35 legislation, you need to be fully aware where each contract you undertake falls within the legislation. It is recommended that you get each contract individually assessed, and if you are caught by IR35 you will have to reassess how you operate for that assignment.

Benefits of a PSC

I chose to take a year out after my A-Levels to gain some true life experience away from the security net of full time education… My decision to apply for a degree in Business is due to my desire to aim for a career in the promotion of electronic music. This initiated from a visit to London, where I had the opportunity to experience the deeply fascinating influences of the local club scene to the culture of our times… I enjoy extensive reading and recognise that this is essential in studying law.


A PSC is often used to describe a common type of limited company that is set up by self-employed workers, contractors and consultants. The PSC supplies professional services to end-user clients directly via the contractor or through an agency. PSCs are favoured by many end clients and recruitment agencies as they do not like to hire self-employed individuals unless they have their own limited company. When it comes to contracting, many clients and agencies prefer to work with companies rather than individuals . That’s because, even when hiring sole traders on short contracts, the relationship may point towards employer and employee, rather than client and contractor.

If a contractor operating through a limited company is found to be doing the same work as an employee, the IR35 rules mean they will now pay roughly the same tax as an employee. An inspector from HMRC will determine the status of a contractor by carrying out an employment test. The contractor must meet certain criteria and show the inspector there’s no employment relationship to prove they are ‘outside’ of IR35 to continue operating as a personal service company. If a contractor is found to fall ‘inside’ of IR35 rules, it could have a big impact on how they get paid, and how much tax they need to pay.

In this article, you’ll find out about the different types of non-profit businesses and how you can set up your own. This could have a big impact on how you get paid, and how much tax and NI you have to pay. Automation is not only realistic but also can be beneficial to small businesses.

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