All contractors are potentially vulnerable to the ‘too much going on’ scenario. On one hand they are their own boss and have more flexibility; on the other they work temporary contracts and constantly live with the degree of uncertainty which that brings. In addition, they must provide their equipment themselves, are subject to the whims of whoever they happen to be working for at the time, don’t receive employee benefits (like sick pay or holiday pay) and are responsible for their own legal and financial matters.
There you go, I’ve said it, ‘financial matters’. The reason people become self-employed contractors is because they are good at what they do and realise it could give them higher earning opportunities or a better lifestyle. It is rarely because they want to be tied down with paperwork and numbers. There is no doubt that contractors can earn more and have a better work-life balance (if they choose) than employees, but it does come with a cost. Ticking boxes.
You don’t know what you can’t see!
One of the problems which constantly arises for contractors, when it comes to finances, is knowing exactly how much money they have at any given time, or how much is owed to them. Also known as that notorious serial killer of small businesses ‘cash flow’. Planning for tax and other costs can also be an issue; and then, of course, there is the whole black art of submitting accounts, filing tax returns and fulfilling other legal requirements. Ticking critical boxes!
That is where the cloud comes into its own, particularly if your accountant has expertise in industry leading software like FreeAgent. It is almost like the designers of this product have been contractors themselves, walked the walk and then designed the solution. Whenever we introduce FreeAgent to our contractor clients, I get the feeling that parts of what it does have been developed specifically with them in mind. Simply because it does tick all of the boxes!
It is like someone has learned in the real world and then placed it in the cloud…
With FreeAgent, our contractor clients can access live financial information anywhere they have an internet connection. This means that they can:
Know exactly how much is in their account in real-time
See exactly how much tax they owe in real-time
Know their VAT bill in real-time and submit VAT returns online
Instantly see how much money is owed or invoices due
Have bank transactions simultaneously updated in the software
Monitor and separate ‘tax owed’ from ‘money earned’ instantly
Set-up automated processes and reminders to simplify their admin
Run payroll complete with RTI submissions
Allow their accountant to see the same information
In actual fact, the beauty of working with an accountant that specialises in FreeAgent for contractors is that they get all of these amazing benefits without any of the effort. Because we will set it up and manage it for them, all they need to do is log on and look at the results.
Life in the clouds is good for contractors and it really clears the air when it comes to managing their finances.