When it comes to accounting, there are plenty of complex rules and regulations that could trip you up if you’re not careful.
As with most things, it’s often the smaller points that could catch you unawares and end up costing you. That’s why it’s a good idea to speak to the experts, such as ourselves, to help keep you on the straight and narrow.
Here’s a quick list of things to be mindful of:
Keep a calendar of important dates
As a contractor, there are quite a few deadlines to be aware of – such as the self-assessment filing date, when Corporation Tax payments are due and many more. If you don’t keep up with your obligations, you’ll usually face an automatic fine that increases the longer you fail to comply.
It’s therefore a good idea to keep a record of important dates and deadlines so you can keep on top of things. You could also seek the help of a specialist accountant as an extra layer of security.
Don’t lose out on VAT
Value Added Tax (or VAT) can be a bit of a minefield for contractors, as there’s a lot of confusion about what you’re entitled to claim for. Although you don’t have to register for VAT before you reach a certain threshold, it’s a good idea to do this early as it allows you to reclaim input tax.
You could also register for the Flat Rate VAT scheme, which lets you charge clients at the standard rate but pay tax to HMRC at a lower rate that’s based on the sector you work in. For more information on this, it’s a good idea to speak to your accountant.
Keep your receipts
This may seem like a bit of a no-brainer, but you’ll need to keep hold of your receipts to claim business expenses. Although it may seem laborious holding on to random bits of paper, it’s the only way to protect yourself in the event of a HMRC investigation.
Check your bank account
Make sure you’ve got enough cash in your bank account to cover your outgoings and accounting obligations. Keep an eye on what you’re spending so that you have enough money left behind just in case something arises.
Keep on top of any payment deadlines (such as self-assessment and Corporation Tax) so you don’t end up falling short and incurring hefty fines. Don’t forget that if an assignment falls within IR35, you’ll need to pay tax and National Insurance differently – so it’s a good idea to have a reserve in place to cover any additional payments you have to make.
Don’t take on too much
If you end up taking on too much administration, you might end up drowning in paperwork – and who wants that? If this happens, you could start missing deadlines and rack up expensive penalties.
To avoid this, it’s a good idea to speak to a specialist contractor accountant and let them lighten the load. This will let you get on with what you do best, safe in the knowledge that everything’s taken care of.
Get in touch
Are you a contractor? Do you have any hints and tips to keep on top of your accounting responsibilities? Share your pearls of wisdom on Twitter.