Give Your Business a Health Check
Time for a Business a Health Check
Commonly a typical contractor spends 10 months a year working on contracts with only short periods of respite in between. As a result of this way of working, it is rare that a contractor has the time to step back and re-assess their business needs. Keeping your company in good health is very important in maintaining a successful contracting career as well as utilising your business’ bottom line.
Here are five ways that you can give your business the business health check that it probably needs.
- When did you last review your expenses? – Claiming expenses is a perk enjoyed by contractors operating compliantly, and can be a great way to bolster a Ltd Company’s bottom line. Many contractors that we engage with are often under-utilising this commodity, however, meaning that they are not claiming back many legitimate business expenses that are eligible for tax relief. As a result, we advise that all contractors take the time to review their outgoing expense claims (or even better, let your accountant do it for you!).
- Are you utilising your company structure? – How your Ltd Company has been set up can dictate how you withdraw your income and utilise funds. If you are the sole shareholder and director of your Ltd Company but have a spouse or partner that could take a minor role within the company, then you may be able to position them within your business to change the way in which you withdraw your income. Having a spouse as a shareholder of your business means that they are also eligible to the tax-free dividend allowance, and having them as a director can mean that they can benefit from the tax-free salary allowance (so long as they do not withdraw additional income elsewhere).
- Do you have the right insurance in place? – Insurance can be very effective for contractors, covering them from those rare and unfortunate eventualities. Having insurance in place can give a contractor the peace of mind that if the worst happens then they are covered, as well as being able to show that they have taken precautions. Agencies and end clients often stipulate that insurance is a mandatory requirement in order to work a contract, and HMRC see insurance as a positive indication that a contractor is operating as a business in its own account, positively attributing to its IR35 status.
- Are you investing in a company pension? – As all contractors operate as self-employed individuals, they do not benefit from the perks of being an employee, and a major example of this is employer pension contributions. Investing in a company pension can be a great way of maintaining your future investments as well as lowering your company’s corporation tax bill throughout the year.
- Is your business banking provider working for you? – Much like your personal current account, having the right business bank account can have a very positive impact on the way you conduct business and ultimately your bottom line. It is advised that you take a step back and consider whether your business banking provider is working for you. They may have tacked on hidden fees throughout your time as a client and they may not have the most user-friendly online accessibility, both of which are unacceptable for the modern contractor.
These five questions are all questions that contractors should be asking themselves and should key elements of your business health check. Operating via a Ltd Company can be a highly lucrative and successful way of working, and self-employed professionals need to make sure that they are making the most of their businesses.