Why, even as the economy improves, freelancers remain indispensable

It has often been said that it's in uncertain economic times that businesses turn to freelancers, but that when the economy looks to be in better shape - as recent figures have suggested - firms are more inclined to get work done in-house or pay another, larger supplier. This raises an important question for the freelance client of one of Sherwin Currid's (http://www.sherwincurrid.com) tax accountants in Surrey - how do you convince a business to continue using you amid what is likely to be greater competition?

First of all, the freelancer should emphasise that they actually have more time to prioritise that piece of work than the larger agency for which it has been pushed to the bottom of the 'must-do' list due to the arrival of a major contract from a bigger client. Freelancers are also more flexible than these larger companies, not being constrained by 9-5 office hours or a contract of employment dictating certain hours. You are much less likely to have a problem with working into the night on an urgent project, making you the natural choice if the client suddenly receives work with a very tight deadline.

Another advantage of a company choosing you is that communication is simpler. The business can speak directly to you, the person carrying out the work, increasing the likelihood of a quick and accurate response to any queries. If that business brings in an external company instead, they are more likely to have account managers and other intermediaries to communicate with, often meaning slower responses and even information getting lost along the way.

Nor does the larger agency necessarily have access to a lot of extra expertise compared to a freelancer. The clients of our accountants in Surrey actually often have very good connections and possess a deeper pool of knowledge than a company, due to the variety of projects on which they work. Indeed, there are many freelancers out there possessing a broad range of skills, meaning that a company can benefit while avoiding the added extras that a company may try to sell to them. In many cases, individual freelancers can also be more experienced than agencies.

A Sherwin Currid accountant in Surrey would also advise their freelancers to remind their prospective client of how often freelancers are used by other companies. Even if they turn to a larger company, that company may still use freelancers rather than have all of the work done in-house, particularly at times when present employees are stretched by high demand. This raises the prospect of the prospective client simply using you to cut out the middle man and the associated extra fees.

Plus, of course, one can't ignore the simple cost advantages of hiring a freelance user of a Sherwin Currid (http://www.sherwincurrid.com) tax accountant in Surrey. Freelancers often work from home, therefore lacking such overheads as a larger office, and their flexibility also helps to make them a sound, cost-effective option, especially for a smaller company. 

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637 .    

What insurance is most essential for freelancers?

Even with the best-laid plans, there are many things that can go wrong for the freelance clients of accountants in Surrey from Sherwin Currid (http://www.sherwincurrid.com), not least incidents that require financial compensation. One unfortunate event can wipe out a freelance business if the right insurance is not in place, but freelancers will need to carefully consider those forms of cover that are most suited to their own activities.

One controversial piece of legislation, for example, is the intermediaries legislation, better known as IR35. Many a client of a tax accountant in Surrey have found themselves being investigated by HMRC and deemed to be employed. You may therefore want to take out specific contractor tax investigations insurance covering all investigations that are ever likely to be conducted into your personal or business tax affairs. PCG, for example, offers its own highly rated Tax Investigations Insurance.

Certain forms of insurance are absolutely compulsory for freelancers. These include employers’ liability insurance, which acknowledges the legal responsibility that employers have for the health and safety of their personnel at work. It means that if any of your employees fall ill or are injured as a result of work, you have protection covering possible compensation and legal fees. With very few exceptions, all freelancers need a minimum of £5m of employers’ liability insurance. Nor is it impossible that someone could be injured, or their property damaged, as a result of a collision while you are driving your car, making motor insurance a wise investment.

There, are, however, further types of claims that can be made against the company of someone using a tax accountant in Surrey, making some other types of cover recommended. These include professional indemnity insurance that, in the event of your professional advice or services causing a financial loss to one of your clients, protects your business from the cost of compensation. In certain professions, such as accountancy, law and financial services, this type of cover is a legal requirement. However, there are other professions to which it could have relevance if freelancers give professional advice. Examples include marketing, publishing, engineering design and management.

Freelancers are also routinely advised to take out public liability cover, which protects them against accidents to members of the public or property damage occurring as a consequence of their business activities. Property and contents insurance is also vital for the protection of business property, encompassing premises, fixtures and fittings, computers, equipment, stock and more – with those working from home advised to check that their home contents insurance actually covers their equipment used for business purposes. If not, business-specific cover will need to be purchased.

Other types of insurance exist that are worthy of consideration by a freelancer using Sherwin Currid’s (http://www.sherwincurrid.com) tax accountants in Surrey, ranging from permanent health insurance and income protection insurance to critical illness insurance and legal expenses cover.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

How freelancers and contractors can charge better rates

All freelancers and contractors, including the many clients of Sherwin Currid’s (http://www.sherwincurrid.com) accountants in Surrey, want to be able to charge a lucrative, but nonetheless competitive rate. However, the question “what’s your fee?” has long proved a difficult one to answer for many such professionals, with certain mistaken beliefs needing to be combatted if they are to strengthen their hand in negotiations with prospective clients.

Often, in their anxiety to curry favour with the client in question, a freelancer will be too willing to provide a definite quote, instantly turning what could be an advantageous bargaining position into a passive interview – on which they are on the wrong side. Ultimately, all fees are negotiable, so rather than instantly pricing yourself out of the market with a price twice as much as what any client is willing to pay, you need to keep your options open while asking for more information. After all, the ultimate rate depends on the nature of the work to be undertaken. Savvier clients of a tax accountant in Surrey may even decide to stop having a rate – after all, as the business owner, there’s no obligation for you to have a single fee.

Any freelancer or contractor who quotes a certain price before suggesting that it is “negotiable” is already offering a discount, which in turn can suggest insecurity, so why quote so quickly at all? Instead, a freelancer benefitting from the services of a tax accountant in Surrey should keep asking questions, not least as this also keeps the emphasis firmly on the precise needs of the prospective client. You might ask questions about what it was about your CV that led them to contact you, the urgency of the assignment, who is helming the project, the location of the work and/or the exact expertise in which the client is presently deficient. All of these questions help you to strengthen your negotiating hand as you learn about the value of your skills.

In learning about this value, however, it is important not to lapse into a discussion of your CV and technical expertise, rather than exactly how the client’s needs relate to such experience and expertise. You need to be always talking about them rather than you. This, after all, shores up your position as the expert from whom the client is receiving advice.

You may also find that you can boost demand by suggesting a relative lack of availability, and therefore a choice on your part as to whether you can accept the project at all. Availability, after all, is not valued by needy clients quite like scarcity is. All in all, the client of one of Sherwin Currid’s (http://www.sherwincurrid.com) tax accountants in Surrey can maximise the rates that they achieve by focussing on how they can be valuable, rather than the value that they can command. By rehearsing their responses to common enquiries sufficiently, they will soon be invaluable to their clients.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

What benefits are available to freelancers and contractors?

If you have spent any period of your life to date as a freelancer or contractor, then you will already be aware of the lack of a ‘safety cushion’ of such work. There’s no holiday pay, after all, and short-term contracts create anxiety to win the next one in good time. With all of the will in the world, however, even with one of Sherwin Currid’s (http://www.sherwincurrid.com) tax accountants in Surrey by your side to ensure that your financial affairs are in order, you may still require a bit of extra help from time to time.

That’s why it’s a good idea to investigate the benefits that may be available to you, whether you are struggling to make ends meet around work or you could do with greater financial security in-between contracts. Certainly, those in the former situation may be thankful for the help given to them by childcare vouchers in paying for quality childcare. Many freelancers and contractors among the clients of our accountants in Surrey discover that they are eligible for such vouchers, which allow basic-rate taxpayers to save as much as £962 per year, with this figure potentially reaching £1,195 for higher-rate taxpayers.

There are two means by which those using an accountant in Surrey could qualify for childcare vouchers. Firstly, they could be employed by their own UK limited company, with those paying themselves a salary having the option to pay themselves £55 per week or £243 per month of their salary in the form of childcare vouchers. As the portion of your income that these vouchers represent is exempt of tax and NI, you can not only save a significant amount of money yourself, but hundreds of pounds can also be saved by your limited company on the annual NI contributions that are paid on your salary.

Those on a short-term or long-term contract could also be eligible for childcare vouchers, but they’ll first need to ensure that the scheme is actually offered by the company that they are being contracted by. If it is, then they will need to switch from invoicing to being on the firm’s payroll, and once this is done, agree to salary deductions up to a monthly maximum of £243, before the amount is paid to them in the form of tax and NI free childcare vouchers.

For a freelancer or contractor who has been out of contract for an especially long period of time to the extent of suffering serious financial hardship, another option is Jobseeker’s Allowance (JSA). This basic allowance helps with the cost of living, and to claim it, you must be unemployed or working less than 16 hours a week, as well as actively seeking work. Although certain means-tested eligibility criteria may have to be fulfilled depending on the kind of NI contributions that you pay, many of those using a tax accountant in Surrey from Sherwin Currid (http://www.sherwincurrid.com) have found it to be an invaluable supplementary income.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

Fourth specialist IR35 team deployed by HMRC

Many of our clients here at Sherwin Currid (http://www.sherwincurrid.com) initially approach our accountants in Surrey for advice on IR35. Such people may be intrigued to read that HM Revenue & Customs is now deploying a fourth crack unit of officers charged specifically with investigating freelancers and contractors working under the legislation.

It was confirmed at the last IR35 Forum Meeting on April 29th that HMRC would not only be updating the aim of its existing specialist teams based in Croydon, Edinburgh and Manchester, but would also be adding a new team in Bradford. HMRC stated as its ultimate aim the "normalisation" of the approach taken by the four teams, so that investigations into IR35 could be carried out by non-specialist officers on the basis of its not being the sole or main risk, with advice being provided by specialists as necessary.

The addition of the new team could possibly be attributed to extra resources simply being needed in the light of an increase in investigations. The move appeared to be supported by forum members, who said that they would be "disappointed" in the event of IR35's removal from the dedicated units. For those clients of our tax accountants in Surrey who are unaware, the Forum was established after the 2011 Budget, when the Government announced its commitment to making clear improvements to the administration of IR35. Its members include both taxpayer representatives and professional advisors.

Although the Revenue was asked at the meeting to provide details on the precise number of investigations and other "IR35 statistics", it declined to do so, citing an intention to publish such data on the basis of a set timetable "in the future". However, there have been suggestions by industry observers that even the existing three teams could handle as many as 1,000 IR35 investigations in each tax year. HMRC did at least concede, on the subject of the teams' capacity, that there was a "finite amount" of work that they were capable of handling. This could be partly attributable to the request made to its non-specialist tax officers to "channel cases involving IR35 to the specialist teams."

Supporting the implication that there will be more IR35 investigations in future into many of those using an accountant in Surrey, it was also confirmed that there had been a significant rise in the number of customer enquiries into HMRC's Contract Review service. The department added that it had reviewed 94 contracts and was able to give a response in 89 of them. However, of those, it was "unable to give an opinion" for IR35 purposes in 79 of them. The Revenue said that an evaluation into the Contract Review service would take place in the summer.

Nonetheless, such a high number of "unable to give an opinion" outcomes is likely to concern many of those using a tax accountant in Surrey from Sherwin Currid (http://www.sherwincurrid.com), and indeed, may simply confirm the continued considerable usefulness of our own fixed fee IR35 review service.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

What directors need to know about personal taxation

If you are the director of a limited company, then it’s vital to remind yourself that you and your limited company are separate legal entities. This makes the taxation situation for limited companies different to that for non-limited companies. A limited company’s director and employees pay income tax via the PAYE system, as well as employees’ National Insurance Contributions (NICs). Our accountants in Richmond and the wider Surrey area here at Freelancer Accounting (http://www.freelanceraccounting.com) can provide advice relating to all aspects of personal taxation for directors.

The directors and employees of limited companies have taxable income on which they must pay income tax. HMRC has a system for the collection of income tax from directors’ and employees’ pay as they earn it, known as PAYE (Pay As You Earn), with the tax being deducted monthly. It is the responsibility of the employer to deduct income tax and NICs from the pay of its employees, before submitting the deductions to HMRC. The 19^th of each month is normally the deadline for this, although quarterly payments may be possible if your average monthly payments are not likely to reach a minimum of £1,500. 

As a prospective or current client of our accountants in Surrey, you should also be aware of the taxation of directors and employees on benefits in kind, such as medical insurance or a company car. Employers are also required to pay class 1A NICs on benefits, with a form P11D being used to declare them on an annual basis.

Freelancer Accounting can assist with all aspects of personal taxation

All freelancers have their own tax responsibilities in the form of personal income tax and employees’ NICs, in addition to business taxes, and the small business accountants of Freelancer Accounting can provide any advice that you require on aspects of personal taxation. You may require advice on the Self Assessment system, for example, within which most freelancers fall. This makes necessary the submission of a personal tax return for each tax year ending 5^th April, and it needs to be correct and submitted in time if you are to avoid being charged interest and penalties.

Clients of our accountancy services typically need to complete a tax return due to being a director of a limited company, a sole trader or a freelancer with income exceeding £100,000. Generally speaking, you’ll need to complete an annual tax return if you have tax to pay outside of ordinary employment, pension income and small amounts of investment income – and you are responsible for informing HMRC on an annual basis if you need to complete a return.

When it comes to Self Assessment, our accountants for freelancers can give you advice on when to fill in the form, the consequences of failing to file a tax return on time, what actually appears on the form and even personal tax on dividends. Contact Freelancer Accounting (http://www.freelanceraccounting.com) now if you are a limited company director who requires the highest standard of tailored advice.

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

Advice on filing tax returns for payments staggered over two tax years

Many people running freelance businesses in Surrey will appreciate every piece of advice they can get on how they can keep on top of their finances. Indeed, accountants in Surrey Sherwin Currid (http://www.sherwincurrid.com) has no shortage of advice relating to this area. One particular piece of advice that we can give is how they should fill in a tax return for payment for a piece of freelance work which is staggered over the course of two tax years.

For example, a freelancer could deal with a client who asks for particular work and, at that point, pays the freelancer a large amount of money - for example, 50% of the total amount of money due for the work - upfront. The work could then be completed by the freelancer a few weeks later, shortly after which point the client could pay the rest of the money due for the work. Usually, it would be straightforward to record this on a tax return; however, the picture becomes more complicated if the first amount of payment occurred in one tax year - for example, during March 2013 - while the second amount of payment occurred in the following tax year - for example, on 18 April 2013.

So, how should this situation be recorded on a tax return? Tax accountant in Surrey Sherwin Currid advises that the income from the project must all be included in the tax return for the tax year that the work was completed, regardless of exactly when or how the client paid for the work. So, citing the above example, if the freelancer completed the work before 5 April 2013, all of the income from the project must be included in the tax return for the 2012/13 tax year.

Recently introduced is a new simplified accounting method which permits sole traders and most partnerships with annual sales that fall below the VAT limit - which is currently at £79,000 - to record income and costs for a project in the tax return for the tax year when the work was paid for, not necessarily completed. However, it will only be possible for freelancers in Surrey and, indeed, elsewhere in the UK to use this method for work completed during the 2013/14 tax year at the earliest.

For more tax advice from leading accountants in Surrey Sherwin Currid, go to http://www.sherwincurrid.com.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.