close menu

6 common accounting mistakes contractors make

by 1st Contact | Jun 25, 2014
  • If you work as an independent contractor or run your own limited company, you’re no doubt aware of how difficult it is to do the work that’s required of you, let alone keep a handle on your company’s finances. Here are six common accounting mistakes many contractors make – and how you can avoid them.
    Accounting

    Procrastinating

    The saying goes that only accountants love doing accounting work. So it’s easy as an independent contractor to leave things until the last minute, simply because you’re dreading it. But letting your paperwork pile up is a recipe for disaster. Important things could go missing; you could forget what receipts were for, leaving you with a nightmare of a job when the time comes to file your tax return.

    Many contractors also delay filing a return, incurring heavy penalties which could easily have been avoided. Try to set aside half an hour a week (perhaps on a Friday afternoon) to file bank statements and record expenses. Not only will you feel less overwhelmed each week, you will also save yourself a mountain of stress at the end of the tax year.

    Losing receipts

    Traditionally, contractors needed to provide HMRC with receipts if they required proof of expenses. This means you needed to keep all of your receipts in a safe place and – as per point 1 – record your expenses regularly.

    We offer clients a cloud accounting app, which allows you to take pictures of receipts on the go with your iPhone or Android phone. We then see these receipts and deal with them in the background, saving you the hassle of keeping track of every last bit of paper. This means that, in theory, you could throw away or lose a receipt once you’ve taken a picture of it using the app. This advance in technology is hugely beneficial for on-the-go contractors.

    Missing out on tax deductions

    Many contractors are unaware of all the expenses they can claim and lose out on hundreds of Pounds every year. Others are too busy to properly record their expenses for claiming purposes or don’t believe the amount to be significant enough to warrant the effort. Don’t let that be you. Depending on your circumstances, you could claim back overnight expenses, meals, dry cleaning costs, fuel costs and more – that all add up to extra money in your pocket.

    Borrowing money from your company

    Whether it’s raiding the petty cash tin or borrowing money that’s not a salary or dividends, taking company money is a sure-fire way to make your accounts complicated and add to your end-of-tax-year stress. Avoid it if you can; if you can’t, get professional advice as soon as possible.

    Paying too much tax

    Many contractors miss out on tax breaks and/or pay too much National Insurance (NI) because they are uninformed about tax issues. Millions of pounds lie unclaimed, and it’s estimated that one in three workers are due a tax refund. You might think overpaying is not too bad since you can get it back – but the truth is, many people never bother to claim a refund and lose out on hundreds – if not thousands – of Pounds that shouldn’t have gone to HMRC in the first place.

    Doing your own accounts

    Getting your accounts wrong could mean huge financial penalties and the kind of stress you really don’t have time for. A typo, a missed deadline, an incorrect number – these can all lead to problems that can easily be avoided simply by hiring a professional accounting company. You might feel like you’re saving money by doing it alone, but in the long run, it could cost you dearly.

    Choose a long-standing reputable firm that specialises in limited company and contractor accounts. They can help to minimise your tax liability, offer assistance in applying for tax breaks, and ensure you don’t pay too much tax. You can also relax, knowing that you are 100%-compliant, and putting the maximum amount into your pocket every year.

    Special offer: For a limited time, 1st Contact Accounting will be doing all the necessary paperwork to get your company going – without charging you a penny. So grab a cup of coffee and let’s get your company registered.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

    • Guide to UK PAYE tax forms
      A guide to UK PAYE tax forms P45, P60 and P11D
      Jun 14, 2019  |  by Kobus Van den Bergh
    • Cut-taxes
      The 2019/20 tax year changes: What they mean for you
      Jun 10, 2019  |  by Scott Brown
    • confused
      Do you need to complete a Self Assessment tax return?
      May 29, 2019  |  by Kobus Van den Bergh
    • Tax refund money
      11 excellent ways to spend your UK tax refund
      Apr 09, 2019  |  by Kobus Van den Bergh
    • London-business
      The UK still the best country for business in 2019
      Apr 04, 2019  |  by Scott Brown
    • Contractor choosing door
      Contractor insurance: Choosing the right cover for your risks
      Mar 12, 2019  |  by Kobus Van den Bergh
    • Making Tax Digital for VAT
      Making Tax Digital for VAT deadline: What you need to know before April 2019
      Feb 18, 2019  |  by Scott Brown
    • Businessman-running
      Did you overpay HMRC? Here’s how to get your tax refund
      Feb 07, 2019  |  by Kobus Van den Bergh
    • Business
      Will 2019 be a good year for UK contractors? IR35 and the loan charge
      Jan 24, 2019  |  by Ashley Deakin
    • Business-concept
      Moving your business to the UK? You’ll need to understand the UK’s VAT regulations
      Nov 12, 2018  |  by Scott Brown
     
     

    South Africa

    Cape Town

    Regent Square
    Doncaster Road
    Kenilworth 7708 +27 (0) 21 657 2120

    Durban

    25 Richefond Circle
    Ridgeside
    Umhlanga 4320 +27 (0) 31 536 8843

    United Kingdom

    Croydon

    One Croydon
    12-16 Addiscombe Road
    Croydon CR0 0XT +44 (0) 20 7759 7514

    Australia

    Melbourne

    9 Yarra Street
    South Yarra
    VIC 3141 +613 (0) 8651 4500

    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services Licence issued by ASIC to deal in foreign exchange (1st Contact Group - AFS Licence number 335 126).

    We use cookies to provide the best website experience for you. Using this website means that you agree to this. How we use cookies.