As I’m sure you’ve discovered by now, being a contractor isn’t quite as easy as a lot of employed people think. You have to invest a huge amount of time in marketing just to get your business off the ground. Once you’ve got some clients, you have to pull all the stops out to make sure you leave a good impression. After that, there’s any number of monetary and resource factors which you have to worry about. If your cash flow is getting the better of you, then here are a few tips for better financial management.
First of all, set yourself up as the right kind of company. There are various pros and cons of setting yourself up as a limited company, sole trader, and any other type of business you can declare yourself as. A big part of it will hinge on the kind of work you do. A good way of figuring out the best choice is networking with other professionals in your industry, or reading reliable journals tied to your specific niche. However, one big consideration which all freelancers and contractors should keep in mind is how they can maximize their disposable income. A contractor operating as a limited company will stand to gain much greater tax savings than one that’s registered as a sole trader. However, this comes with its own specific set of drawbacks. Be sure to do your homework, and register as the right kind of business.
Credit: Pixabay
Next, make sure you’re not missing out on any of the expenses which you’re eligible for. The regulations for claiming tax-deductible expenses are extremely complex, and are always in a state of flux. Yes, understanding it all can be a real headache. However, if you brush over it you may give away money which you really can’t afford to do without! Visit the government’s website to read up on what’s allowed and what isn’t, or talk to a contractor’s accountancy like Taxup if you want to speed the process up. Pretty much every kind of contractor will have some expenses that he or she can claim on. If you want your business to reach its full potential, it’s important to find out which ones apply to you.
Finally, make sure you’re organizing your finances as thoroughly and as early as possible. I know that your time is very stretched as it is, and going over designs for a new logo is much more exciting than pouring over your books. I hate number crunching as much as the next person, but it’s a necessary evil. If you don’t tackle your finances head-on and as soon as possible, they’ll cause you far more stress further down the line. Make sure you’re keeping organized and accurate invoices and receipts, and that you’re leaving yourself enough time to sort and file all the appropriate tax returns and statements. This will mitigate the stress of bookkeeping, and help you to steer clear of any serious legal trouble that can come with incorrect returns.
