Running your own business can seem like a lot of responsibility, and if you’ve never been self-employed before, knowing where to start can be overwhelming. Especially at such an uncertain time, with Brexit negotiations still ongoing and what seems like endless changes to contractor legislation such as IR35, it’s understandable to feel uneasy.
But it doesn’t have to feel that way, with the right preparation and organisation, contracting can give you the freedom to live the life you want, comfortably and without worry. Here at Intouch Accounting, we can help you get to grips with the likes of tax, VAT, expenses and more.
If you’re considering taking the leap into self-employment or you’re a contractor feeling a little bit lost, we’ve got some handy tips for staying ahead of the game and getting the most out of your contracting career.
Keep track of your outgoings
This may sound like an obvious one, but it can be so easy to lose track if you’re not organised, which makes doing paperwork such as tax returns a nightmare. The easiest way to keep track of your outgoings as a Limited Company contractor is to have a business bank account, and ensure this is used for all business-related ingoings and outgoings. That way, you know exactly where all payments are coming from and it makes expenses easier to deal with too.
Make sure you keep all of your receipts if you plan to claim something as a business expense. The last thing you want to worry about when running a business is trying to sort through lots of old receipts, so keeping a spreadsheet or using an expenses app is a great way to keep on top of things. This then makes it simple for you or your accountant to find all the information you need when it’s time to submit it to HMRC.
At Intouch Accounting, we have our very own cloud-based portal where you can easily log your expenses and upload all the relevant documents whenever you need to, making the daily management of your accounts a breeze!
Be savvy with your income
Make sure you are aware of the tax and NIC thresholds, as well as all your personal allowances for the current tax year. If you’re not, then you could be missing a trick when it comes to maximising your income. As a Limited Company contractor, you have a number of options when it comes to paying yourself, so it’s good to have an understanding of salary and dividends, and when to use them. When done right, you can lower your tax bill and maximise your take-home pay – what contractor doesn’t want that?
It may sound confusing but it’s relatively simple when you break it down. However, every contractor is different, so we recommend speaking to a specialist contractor accountant, like ourselves, to find out what’s best for you.
Know your place in relation to IR35
IR35 has understandably sparked a number of questions from contractors in regards to what this means for them going forward. However, IR35 won’t cause you any problems as long as you are aware of where your contracts fall and you are open about that with HMRC.
From April 2020, it will be your client who decides your IR35 status, so we recommend getting clued up on the subject and having an open discussion with your client to ensure you get the best outcome for both of you. If you’re genuinely working outside of IR35 then you should be able to continue to do so, and if you fall inside of IR35 then there a couple of options as to how you choose to trade.
For those who are new to contracting or haven’t yet started contracting, you can find out everything you need to know about IR35, including what it is and how it will affect you, here. And remember, if you’re one of our clients then you get unlimited IR35 advice and contract reviews included in your monthly fee.
Choose the right contractor accountant
If you’re feeling a little lost right now your first port of call should be your accountant. But if that’s not the case then perhaps it’s time to re-evaluate that relationship. If your accountant is difficult to get hold of, unable to answer your questions and you generally feel like you’re overpaying for a service you’re not getting, then it’s time to look at switching.
Switching accountants in itself sounds daunting, but it really doesn’t have to be. The whole point of an accountant is to make your life easier, so you can focus on building your business, while they manage the daily functioning of your accounts. If you’re new to contracting and don’t yet have an accountant, then make sure they can offer you the level of support you require.
What do you get for your money? Will you have a dedicated Personal Accountant? Are they IR35 specialists? These are just some of the questions you should be asking when choosing your accountant.
Look after yourself as well as your business
Your business starts with you, so while you need to be savvy with the figures, you also need to look after yourself to ensure you’re working to your full potential. When working for yourself it is vital you have self-discipline and the ability to motivate yourself due to the independent nature of the work, but naturally, everyone has moments where this can be difficult.
On the other hand, working for yourself can make it difficult to pull yourself away from the work and separate your work and personal life. While a better work-life balance was likely one of the reasons you started contracting, it can get lonely sometimes, and this is where you might find yourself getting a little lost. If you work from home then make sure your work space and your living space are clearly defined.
Working in a coffee shop could give you a change of scenery once in a while, or perhaps you’d benefit from renting a shared workspace where you can meet other freelancers. Sharing experiences with other contractors can help you learn and grow, and it can give you that support system throughout the highs and lows, because naturally there will be some.
How Intouch Accounting can help
If you need a hand keeping on top of all of these things, then enlisting the help of a specialist contractor accountant, such as ourselves at Intouch, can really help. We make sure our Limited Company clients are fully up to date on the latest legislation and legal requirements, we assist in the day to day maintenance of accounts and filing the necessary paperwork, and we offer unlimited IR35 reviews, all included in our monthly fee.
We make contracting simple by looking after your accounts so you can focus on building your business and making it a success! It’s easy to sign up or switch, simply give us a call and we’ll be happy to talk you through our services in more detail.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.