Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.
Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.
Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.
The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]
Contractors who run their own limited companies are required to have structured record keeping. Did you know that there are penalties for businesses that are not keeping their records in an HMRC defined satisfactory state?
HMRC fire another shot across the bows of the smaller business; "Businesses are legally required to keep certain business records...there are penalties for failing to keep proper records...."
HMRC need to collect more tax. Forget the banking sector who often channel earnings offshore, it's the smaller companies that HMRC is focusing on to reduce unpaid tax.
The Forum of Private Business point out that the initiative comes even though HMRC promised a 'lighter touch' attitude to bookkeeping in light of various tax changes.
Visit HMRC's website spin it by promoting of a high level of record keeping in order to minimise the risk of tax overpayment. If sufficient evidence of income and outgoings cannot be shown, mistakes are more likely to occur.Demonstrating poor bookkeeping will carry a punishment of £3,000.
"The businesses will benefit from improved financial management which in turn will boost their chances of survival. Those seen to be fulfilling their obligations will likely have a lower chance of a subsequent compliance intervention from the taxman."
It has never been so important for contractors running their own limited company to get themselves a reliable and effective specialist contractor accountant.
In the absence of a personal recommendation you could do a lot worse than take notice of the feedback given by clients of the UK's top contractor accountants. Check out the chart of UK contractor accountancy firms.
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If you are or plan to be a freelance contractor, you must get to grips with IR35. Ignore IR35 and it could cost you thousands!
It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.
Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].
Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.