When you are starting out as a contractor or freelancer you will already have a business plan and strategy in place. However, as your business takes off, it’s often the small things that need to be done, but often forgotten about until you apply for a mortgage or send in tax returns. The time saving tips below have been provided by experienced contractor accountants, Bernard Rogers & Co, who provide a wide range of accountant services including a dedicated IT contractor accountancy service.
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Personal and Business Bank Accounts
Financial records should be clear and accurate. One of the common problems that happen with freelancing is to make private (non-business) payments from your business account. This causes a lot of frustration and wastes time reconciling as all business transactions need to be accounted for. It is recommended to have separate bank accounts and of course, keep all receipts for business related purchases.
Last Minute Submissions
Starting a new business has lots of challenges, as well as personal targets to meet. Achieving a steady stream of business and revenue is of course high up on the agenda too. However, one of the problems we often find is freelancers and contractors leaving it to the last minute to submit their information. There are 9 months from year end to send across accounts, so why leave it until the week before the deadline? We recommend setting a personal reminder to ensure accounts are not left this late, as if there are any problems, there often isn’t enough time to rectify before incurring a penalty.
When sending information across to your accountants, it is vital that you send EVERYTHING. Therefore, we recommend keeping a detailed filing system from the start for bank statements, sales and purchase invoices and copies of VAT returns. Missing information will create a delay, and also increase the admin time (and cost) required to process your accounts. If bank statements have been requested for the year, it is important to send every single statement, as even missing one month, or quarter will add to the delay.
Up to Date Accounts
If you are applying for a mortgage it is essential, as a freelancer, that you have accounts that have been updated within the last 15 months. Most mortgage lenders will reject accounts if the last accounting reference date is more than 15 months. We recommend checking your accounts are updated before starting mortgage applications to avoid a delay in the processing.
Tax Return Information
Tax is usually deducted automatically from wages, pensions and saving. Contractors and freelancers with other income must report it in a tax return, and this can be completed after the end of the tax year that it applies to. However, if you need assistance from IT contractor accountants, make sure you send in relevant information as soon as possible and don’t leave it until December or January. It is recommended to check with your accountants on fees as Bernard Rogers charge less if the information is supplied earlier for example.
These 5 simple, but effective time saving tips will ensure your business gets off to the right start. As established accountants we frequently come across the situations listed above and want to make sure, as contractors, you can plan ahead, save time and avoid costly delays.