1. Forgetting to fine tooth comb your contract or not having one.
Starting without a contract is a classic mistake and can lead to much turbulence later down the line. Don’t start work without your contract being drawn up and being in place. After all, these are the terms you will work by, so it’s vital that you know what they are. Also, have you then really checked the contract properly? Will it create any issues for you in terms of IR35? It’s not worth dealing with nasty surprises later down the line.
2. Unrealistic budgeting
Have you factored absolutely everything in when considering your take home pay? How about public holidays, sickness, personal holidays and anything else that could come up? How about the relevant costs that you have to cover yourself, are these on your budget? Have you also considered the gap there could be between each contract? Make sure your numbers are right to avoid financial disappointment- you want to be certain that contracting will work for you.
3. Using Company money as personal money
It’s very important not to forget that you’re running a limited company, therefore, you need leave enough profit for the company to meet its liabilities.
4. Failing to consider IR35
Without realising it the tax legislation that is IR35 could apply to you, and if that’s the case it could drastically affect your income? Or even worse mean that HMRC have the gift of a big fat penalty to deliver to you. So, what should you do? Speak to an Accountant, quick!
5. Thinking you’re an Accountant when you’re not
In the past you’ve always managed to get by doing your own accounts, in fact you’re a bit of a whiz on Excel, so you can handle this. This is most probably the case, and isn’t up for questioning but have you considered the implications of just one mistake being made? Missing statutory deadlines really is more than a headache, it’s a migraine. And then let’s not forget about penalties and fines that can follow. So why not do the contracting, and let a qualified Accountant do the accounts.
Interested in finding out how you can reach your maximum take home pay as a contractor? Have a look here for more details, or give us a call on 02084 446 6112 or just drop our resident tax expert a line at pratik.jani@tenforwardfinance.co.uk
