Contractor Mistakes – The 10 Killer Mistakes that Are Their Downfall

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Contractor Mistakes
Contractor Mistakes

Contractor Mistakes

An accountant tells us the worst financial contractor mistakes that they regularly make. So, be warned. Do not make any of these.

1) Spending VAT or tax money – easily overcome by putting away a set
amount or percentage each month.

2) Not contacting an accountant at the outset – can leave a contractor
in all sorts of problems and often relate to item 1 above.

3) Not having their contract read over – IR35 is still around, so this is
a must.

4) Paying too much for accountancy services – there are still IT
contractors that are paying over £1,000 per year for the same service as
a contractor specialist who would charge about £50 per month.

Completing Tax Returns (Contractor Mistakes)

5) Completing tax returns (personal & company) themselves – this should
be included in your accountancy fees.

6) Weighing up which is best in their own circumstances between ltd co,
brolly or other routes – each contract/individual is different, so seek
advice and make up your own mind.

7) Banking facilities – each company is different and as such the
requirements for banking are different. For example, if maintaining a
balance in excess of £5k, there are those offering accounts with no
charges and a higher rate of interest.

Attention of the Authorities (Contractor Mistakes)

8) Paying minimum salaries – although can be on bad advice, is not the
way to go and will therefore attract the attention of the authorities.

9) Not sending through accounts/tax info in time – in order to prepare
figures, the information needs to be sent through in a timely manner.
So, bearing in mind that many accountants have in excess of 500 clients,
it’s very difficult to chase all outstanding books.

10) Not seeking advice – there’s nothing wrong with asking an
accountant/adviser for advice and sorting out any niggles before they
become problems. Many accountants will, therefore, provide free advice in the hope
that you’d become a client of theirs so abuse the hospitality!

Can readers think of any other contractor mistakes?

For more great advice on Tax issues for contractors click on Tax.

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