Take Home Pay After Tax Contractors Guide To Business Banking IT Contractors – How To Find Work Contractors – Choosing an Accountant

Newest

Take Home Pay After Tax

No comments

Contractor CalcualtorAs employees we are somewhat cosseted and protected from the hugely complex world of TAX, our lovely employers sort it all out for us (well they do most of the time). However, taxes and contractor take home pay is a rather different story if you go Limited and open your own company. OMG we have to sort it all out ourselves! Oh the worry.

Actually it’s all pretty simple, invoice your client, wait for them to pay you (into your business bank account) and move some money over for your salary and then decide how much you want to draw down for your profits. At this stage you might decide to leave some of it in your company for tax planning or you might want to withdraw it ALL. Of course if you did this there’s not going to be any money left to pay your taxes so you might want to leave a little behind.

However I’m getting ahead of myself – Limited or Umbrella Company what route and what’s the impact on my take home pay as a contractor?

This may seem like a daunting choice to make but actually it is quite an easy decision. If it’s a short’ish contract say less than three months or the value is less than £25,000 most contractors tend to choose an umbrella company. However, if it’s juicy three month contract on a large rate it might be worth going limited, best to have a chat with an accountant about contractor take home pay.

As a contractor I’m sure you’ll want to take home as much as possible, well working through a Limited company you’ll take home around 75% – 80% of your contract value whereas with an Umbrella Company  you would only take home approx 60% – 65%.

Using an online take home pay calculator is the quickest way to get an idea of pay for you. After putting in an hourly or daily rate the calculator does the rest. The take home amount assumes full tax planning and a number of other aspects which would need to be discussed with an accountant.

Contractors Guide To Business Banking

No comments

BankingAny contractor accountant will tell you that setting up a business bank account is essential when contracting through your own limited company.

Your limited company is seen as a completely separate entity to you, the company director and shareholder, therefore all finances must be handled through a separate bank account, and not your own personal account.

Usually your contractor accountant will advise you that once your limited company has been formed, the next stage should be setting up your business bank account. The sooner your account is set up the quicker you will get paid from your contract.

Ensure that you choose a bank that offer you the flexibility and the customer care that you need. Start by asking your contractor accountant for recommendations – they will be able to advise you on banks they currently recommend and the feedback received from existing clients.

A few areas to consider before appointing a bank, would be:

  • Online Banking - set up with a bank that allows you free online banking. Most banks, such as Cater Allen, allow free online banking for the duration of your account however, check there is no additional charge for this. This will save you both time and hassle when making business transfers. You will also be able to instantly have access to live statements which can be useful when looking back to various items purchased.
  • Client feedback - testimonials are always a good way of knowing what clients have thought of a service. This is an area your contractor accountant can help you with.
  • Increased fees - ensure that the rate you are paying is not an introductory fee but for the duration of the account.
  • Extra charges - always check that your bank will not charge you additional interest on balances.

Once you are ready to set up your business bank account, make sure you have all essential business documents, as the bank will need to carry out a series of checks before opening a new account. You will require all the documents received when your company was registered, such as your certificate of incorporation, a copy of your memorandum, any share certificates issued and a copy of your passport to confirm your identification.

IT Contractors – How To Find Work

No comments

JobsIn a sector that is so popular, I thought exactly the same earlier this year when I decided to make the move from permie to IT Contractor, I thought where do I start, will I regret the move… and it is a decision I have never regretted. Sure there is always another IT Contractor out there ready to jump into a role you want, but then as quickly as one door closes another one opens.

Before I made the move into contracting, I kept my eye on the IT market, getting regular news updates from ContractEye – their updates gave me the final push in becoming an IT Contractor when niche IT skills saw a spike in higher take home pay around February. Another great site was ITJobsWatch which showed me which areas were increasing and decreasing in pay within the IT sector, again with them showing an overall increase in pay my mind was set.

My CV was the first challenge, (hard when you have been in a permanent position for quite some time) I was unsure what to do and what not to do and felt rather rusty. So following advice from friends, and a few handy advice pages on Google, such BBC News pages – ‘How to write a CV’ – I was ready. I made sure I included all keywords I knew needed adding – initially I thought I should maybe ‘downgrade’ myself with my knowledge in CSharp, Java and DotNet, but then I realised no other IT Contractor is going to  sell themselves short so why should I.

I posted my CV on as many jobsites as possible, sometimes the bigger sites weren’t targeting exactly what I was after so I signed up to more niche job sites such as http://www.itcontractjobs.co.uk/. This way I knew I was guaranteed a contractor job spec to view, rather than having to scroll through permanent job roles job alerts that sneaked in.

Once I decided to become an IT Contractor, I quickly developed my own website, I knew this was an easy way to showcase my talent, another place I could list my skills and another way of getting my contact details out there.

The social media site LinkedIn was also perfect in getting my skills out there quickly! I ‘linked’ with various IT Contractor discussion groups, recruitment agencies and company profiles. Even found a quick video all about Using LinkedIn to win Contract Business from SJD Accountancy. It gave me the opportunity to network my talents and get myself out there commenting and offering free advice. It was also a handy way to learn of new opportunities and was given the ‘heads up’ a few times on IT Contractor roles coming up.

And finally remember who you’ve met along the way. From my old permanent jobs I built up a strong portfolio of contacts, I decided there was no harm in contacting them direct and sending over my CV with the areas I specialised in. Some were even surprised as to the support I could give them. I was placed on their recommended freelancer list for future work and called up whenever I was needed.

Contractors – Choosing an Accountant

No comments

ChoosingBeing in business on your own account does mean you’ll need to allocate yourself some time to do a bit of paperwork and very basic bookkeeping, you can pay an accountant to do it but it’s usually no more than 30 minutes a month if you keep on top of it.  If you’re looking for a contractor accountant here’s a few things to consider:

  • Are they ‘Accountants for Contractors’? Do they have experience in providing contractors with tax advice? Tax is the same for most companies however companies are different and an accountant for an import export business is very different to IT contracting.
  • Are there any additional costs? This is crucial! You don’t want a contractor accountant who will charge you every time you email or call. Look out for what is called a fixed fee accountancy service, they will be able to give you a summary of what is included in your price each month, so no surprise charges.
  • Are they IR35 Specialiats?
  • Do you have one point of contact? There is nothing worse than being passed from pillar to post, so make sure you are allocated one point of contact for all subjects, the same person for tax, bookkeeping, expenses etc.
  • Can you meet your accountant? You want to know exactly who you are dealing with, so make sure you can meet up with the person handling your financial affairs if you need to. You might go years without ever needing to meet your accountant but it’s handy to know you can if needs be.
  • Where are they located? You may be wondering, why is this important, surely I don’t need to have my accountant on my doorstep? However if you were to choose an accountant whose only office was based several hours away, and for some reason you needed to meet with them one day, you really have made things hard on yourself.
  • What credentials do they have? Do they have any awards to back up the claims that they are the ‘best accountants around’? Awards aren’t everything, but I like to know I can trust my accountant, and a few key awards for great customer service and accountancy excellence won’t go a miss.

Save yourself your hard earned pennies and choose an accountancy firm you won’t regret.

« Previous Entries