As a contractor you must have a firm grip and understanding of all outgoings and contractor expenses. Not just to keep an eye on cash flow but also in order to protect your compliance with tax rules. However, when working as a contractor, managing contractor expenses can be one of the biggest headaches and challenges to present itself.
Liaising with a contractor accountant can reduce your burden and help get you on the right path. The earlier you seek advice or an accountant, the more beneficial it will be. In order to help you along, it is wise to understand a few tips in order to take control of your contractor expenses.
Contractor Expenses: General Tips
Firstly, you should understand what your contractor expenses are. Many contractors can find themselves out of pocket because they have little or no knowledge of what defines a business expense. This highlights that a contractor must have a clear idea of outgoings and contractor expenses related to his or her business. Simply, if the spending is vital and necessary for the running of your business (or if it is required to continue and complete the work at hand), then it is a business expense.
It is advisable to make a comprehensive list of all necessary costs, from travel to professional subscriptions and tools. Every time that your circumstances as a contractor change this list should be updated accordingly.
Furthermore, you should keep comprehensive records if you are working as a contractor. It is wise to record everything in full detail, as the key to success in relation to contractor expenses is being organised. Retain all receipts and documents to do with any contractor expenses while filing invoices in a structured manner. When possible, keep multiple copies so that you can cover yourself should documents go missing or a situation arise. This should also make the burden of recording and submitting tax returns easier when the time comes, minimizing your risk of not being fully compliant with the law.
You should make the most of technology for keeping track of contractor expenses, as there are plenty of apps available to help manage and keep track of expenditure. Travel time can therefore be highly productive, using your mobile to work out necessary calculations. As you grow busier, a visible payment solution is important. Processes on paper can be tricky to keep a track of and can also be difficult to manage, if you use a payment solution which gathers all payments in one viewable form then not only will this be easier to manage, but it will also allow you to locate and lower certain costs.
Contractor Expenses: Review
It is incredibly important to take time to review your contractor expenses. While it can be tough looking at all the money spent, to understand your financial situation you must review your outgoings. This can also help you identify areas for change or be aware of how to save money and gain VAT refunds from schemes run by the Government.
Euro Accountancy & Finance Services can help you to take the stress and disturbance out of claiming contractor expenses, contact one of our advisers today.