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If you’re thinking about going freelance and setting up your own limited company, or have already done so, the thought of managing the financial side of things may seem daunting.
However simple your business model, as a limited company there are certain things you have to do by law. Failure to comply could result in back taxes and potential fines.
So, what are your options?
The first option is that you could attempt to do your accounts yourself, but that's easier said than done. Completing your own accounts can be time-consuming, often taking up your spare time. Also, there's the chance of making a mistake and getting your accounts rejected by HMRC.
Bookkeeping is simply the process of recording your business transactions. Regardless of whether you record them in a book, a spreadsheet or a snazzy looking online package, the activity is the same; you have to record them. You can pay people to do your bookkeeping for you, but you're still the one saving receipts and sending over the information. If you forget to send something, it's unlikely the bookkeeper will ever know.
Now the above may all sound a bit ominous, however the good news is that as a freelancer it's unlikely that your bookkeeping affairs will be too complex, after all, you'll just be sending a few invoices (you'll probably immediately spot if they haven't been paid), have a few expenses, pay yourself and some taxes now and again (your accountant will help you with these) and that's about it.
There is some very good low cost off the shelf packages, some online packages and also free accounting software, the knack is not to be led by all the bells and whistles. It's important to bear in mind what you will be recording and how much of the system you'll be using. Ultimately you're the one who will be putting in the information, however, we would advise getting an accountant to check things as no software package will tell you if you have incorrectly entered a figure or claimed for a non-valid expense. They are only as good as the information you put in.
There's plenty of accountants to choose from, however, we recommend you find one that specialises exclusively in providing accountancy services for freelancers and contractors. Even though you might think your requirements are fairly simple, there’s no substitute for working with a professional. All accountants will claim they can cover all aspects of your tax as a contractor, but the best solution is to speak to a specialist who deal with contractors every day, and can make sure that the financial side of your business is always accurate. For more information on the differences between a traditional accountant and a specialist contractor accountant, take a look at our case study.
A good accountant will also provide you with ongoing tax advice throughout the year and not just at the end when it will probably be too late to save you from an excessive tax bill. In order to do this, they have to keep abreast of the UK tax system and all of its regulations and legislative changes. Above all make sure you can visit your accountant by arranging a face-to-face meeting, many firms have popped up that they just offer telephone advice, however, there really is no substitute to being able to chat things through in person.
If you do choose an accountant, you may have some questions regarding what they offer.
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Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.
If you're already a client of ours, you can speak to your dedicated accountant directly.
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