If you are a contractor or considering becoming one, you may be easily forgiven for thinking that all you need to do is source and complete your own contracts. Unfortunately, this isn’t quite the case, as you will also need to stay on top of various financial and administrative matters, including – among other things – tax returns and accounts.
While setting up as a limited company gives you the opportunity to set your own working hours and decide which projects you work on, it is worth bearing in mind that this freedom also means you must take on the responsibility for making sure you meet all the necessary accounting regulations. Unlike when working for an employer, such matters cannot be left to your HR team to sort out for you, and if things like tax assessment returns are submitted late then you might find that you are issued with a fine from HM Revenue and Customs (HMRC).
As such, it is vital that you make the effort to keep a firm grip over your finances. With the new financial year just a few weeks away (in case you weren’t aware already, the 2013-14 fiscal period begins on April 6th), now is a good time to start getting your finances in order. This will require you, among other things, to maintain accurate records about all the income received from your contracts and have receipts for all the goods and services you have bought as part of your work and that you wish to claim tax back on as expenses.
Creating a methodical system for tracking all your incoming and outgoings throughout the tax year ought to be your first step in doing this. However, it can be difficult to stick to when you’re busy working on existing projects and simultaneously attempting to secure future contracts.
Even if you are relatively confident with financial matters, you might not always be able to devote as much time to sorting out tax and other accountancy affairs as you would like. As such, it’s a good idea to utilize the services of an accountancy services provider. In doing so, you will have a team of accountants and other financial experts who will assist you to make sure all of your records are accurate and can help to maximize your income in the most tax-efficient manner possible. Working with such an organization will also help you to ensure that all compliant statutory tax returns that need to be submitted to HMRC and Companies House are done so correctly and on time, enabling you to devote more energy to working on projects.
The above is only a brief guide for contractors looking to manage tax and other finance-related matters, so if you need further guidance it is best to speak to HMRC or an accountancy services provider like PayStream. In doing so, you will be able to get advice that will be relevant to your individual circumstances.
Please share your experiences of keeping on top of your finances and other administrative matters by posting a comment below.