Those who are self-employed will understand that keeping on top of financial affairs is of the utmost importance. For those who are just starting out, this can seem a very daunting task, but there are ways of keeping the whole process manageable so that it does not completely take over. It is important that tasks like this are completed without the need to take time away from other essential aspects of running the business such as marketing and actually doing the work.
Getting – and staying – organized
It is very important when self-employed to keep proper accounts. Noting all incoming monies and expenditure is essential, otherwise it would be too easy to fall into the trap of having more going out than is coming in. If possible, a qualified accountant should manage this side of the business. While some small businesses may be concerned about the cost of hiring an accountant, most find that effective management of taxation can actually save them money in the long term.
The right accounting software should be used and all invoices and receipts input as soon as possible. This allows for checking of the system in real time and makes tax returns and other administrative functions far easier. It will also help to show when bills are due to be paid so that nobody ever needs to knock on the door to demand what is owed to them. One of the easiest ways to stay on top of this task is to dedicate a set amount of time each week to entering data. This should take no more than a couple of hours, but if it is left for any length of time it could begin to amount to several days’ worth of work.
Getting a helping hand
If the thought of dealing with taxation is too much to bear but being employed by another person is also too much, then there is middle ground that will suit. The use of an umbrella company is the ideal solution for those who want to work for themselves but at the same time need the security of knowing that they do not need to complete taxation paperwork themselves.
The freelancer or contractor registers with the umbrella company and becomes an “employee” of the company, which then deals with income tax and national insurance. The company will also deal with invoicing and collecting payments on the freelancer’s behalf. This means that the freelancer is able to spend that time dealing with building their business without the burden of too many administrative tasks. For that self-employed PAYE is still an option.
The important point is that freelancers are not put off going it alone by the thought of endless amounts of paperwork. Many people dream of becoming self-employed and, therefore, independent but, without the right approach to the administrative side of the business, the dream can unravel very quickly, so finding a solution that suits the needs of the business is essential.
Bhavin Gandhi's Blog 