Mark Willis, Director of WillisPalmer, has published his response to a Community Care reader's question in the October 15th edition of the social work weekly.
"I am thinking of becoming an Independent Social Worker, how do I go about this and should I become a limited company?"
The idea of working as an independent social worker (ISW) is gaining popularity in the profession for a variety of reasons. Job satisfaction, greater flexibility, freedom from bureaucracy and bigger earning potential are usually amongst the most often quoted. Many individuals making the transition from a local authority post to working independently will sign up with one or more agencies who may provide regular work in return for a commission or management fee. This is usually charged to the customer and not the ISW.
There are essentially two types of social work agency that might appeal to an independent social worker. The first tends to focus upon providing locum posts, usually to local authorities, but they may also offer discreet independent social work opportunities as part of their remit. The second type focuses much more on providing ISW services when specific pieces of work are required, such as an assessment of parents in care proceedings or a specialist risk assessment for a local authority. These agencies tend to provide a wider range of work for an ISW than the more recruitment focussed companies.
Typically an Independent Social Worker will need to register with HMRC as a self employed individual or alternatively they may choose to establish themselves as a limited company. A limited company is a separate legal entity, distinct from its shareholders and directors and is easy to set up. The cheapest way to do this is to deal directly with Companies House. You will need to complete some forms and provide a memorandum of association which sets out the company name and what it will do. You will also provide articles of association which establishes the rules for the running of the company’s internal affairs.
One note of caution. If you intend to take all your work through an agency you may fall foul of IR35 legislation which will apply if the individual is working for a client under circumstances that if it were not for the imposition of a limited company would be deemed as an employee, or as HMRC sometimes term it “a hidden employee”. Most reputable social work agencies or providers will be in a position to guide you on this issue and most recruit both self employed and limited company ISW’s.
An individual thinking of becoming an independent social worker would be well advised to seek expert guidance from an accountant or solicitor in order to establish the most appropriate route to take. Individuals’ tax affairs can be quite diverse and there may not be significant advantages to trading as a limited company. Although you may pay less tax (dependent upon profit) you are likely to have higher accountancy bills and you will face additional regulation.