Top mistakes that contractors often make
Learn from the mistakes of others
To continually improve we must learn from our past mistakes and let’s be honest we all make them. Our past failures present a great opportunity to help our future growth. As a contractor you can often be caught up in the day to day running of your business and not have the time to take stock and reflect on the things that you could do better. Things like:
Not fully exploiting your online network – Social media plays a significant part in both our private and professional lives. But more often than not, we forget to exploit the value that our network can offer. When was the last time you asked for a recommendation? Or reached out and explored available job opportunities? Don’t be afraid to utilise your contacts.
Ignoring your IR35 status – Are you fully confident with your IR35 status? Many contractors are either unaware or choose to ignore their status in the hope that HMRC will not find out. Consequently, this can end up being a very expensive mistake.
Not investing in yourself – Just because you are an independent contractor it does not mean that you should not try to continually upskill yourself. In an economy that demands a flexible workforce, standing out from the rest of the market will give you the competitive edge over your peers and as a result you will reap the rewards.
Poor cash flow – This is a key reason as to why businesses fail. Not keeping on top of your invoices can result in financial problems. Therefore, it is worthwhile investing in an accounting tool such as FreeAgent, which can manage this for you.
Spending your company’s money – As an experienced contractor you should be fully aware that your limited company is a legal entity in its own right. When taking dividends from your business you must ensure that the company has enough retained profit in order to do so. The penalties could be serious, for example not being able to pay your company’s VAT bills. A specialist contractor accountant should be able to advise you on these matters.
Becoming complacent with your accountant – UK tax laws are a minefield of ever changing legislation and the costs of failing to comply can be extreme. Are you confident that your current advisor is minimising your current tax obligations whilst providing you with the best advice?
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