Whatever part of the industry you are in there are always great benefits to be had by making the move to contractor. These benefits include more control over your job and work hours, wider range of skill development, whereabouts you actually want to work from – and finally the financial bonuses (which can be significantly more).

Functioning through a limited company is known as the most efficient way of working tax-wise. Some of the time people become slightly confused and start banging their head against the wall when they have to start dealing with paperwork, business planning and financial plans/strategies.

How a Contractor Calculator can help

If you’re looking for an easier way of predicting your financial situation concerning incomings and outgoings, the best thing to use is a contractor calculator. If you are in liaison with a contractor accountant, they should have a part of their website which deals with different styles of calculators, which indefinitely can help you with all your financial planning endeavours.

Keep in mind that a contractor calculator is only a rough prediction of what can be claimed, paid or earned. It is a device which supplies you with information which will ultimately help you in regards to:

• Fuel planning
• Salary outgoings
• Tax
• Expenses
• Dividend
• Tax
• VAT

These are just some of the functions of a contractor calculator.

Business Plan

A contractor calculator should be indeed used when quick, small decisions need to be made affecting your company and business. The best thing to do, in my opinion, is at the genesis point of any business – is to create a business plan. Planning gives benefits such as the ability to make continual improvements, more focus, and clearer financial goals whilst gaining hindsight of issues you may need to address.

A good contractor accountant will be able to advise you upon all of this, whilst offering you more slightly more exact figures if needed upon tax and business planning.

Tax returns with all its details of PAYE, income, contractor tax etc. can be pretty confusing to say the least, and it can indeed wear you out if you do not know what you are doing – or if you have had no help submitting one before.

Why do I need to do a tax Return?

The HMRC that we all knoTaw and love want to know ALL about your income, business expenditure and profits on your business assets (capital gains tax). From submitting all this juicy information to them, they can successfully and accurately work out your individual tax bill. At the same time it reveals to them if they owe you, or if you owe them any tax.

Everyone who is self-employed needs to fill out a tax return. It doesn’t matter how many hours you’ve worked, if you’re being paid outside the PAYE scheme – you fill out a tax return regardless. If you don’t get a payslip or pay income tax you will, probably, need to fill out a tax return.  If you’re still worrying about contractor tax, I will come to it in a bit.

When / How do I fill it out?

You need to fill out your tax return either by hand (31^st October) or online (31^st January). I’d personally advise doing it online.

The guide is over 100 pages long, and that’s just the expenses guide. Getting hold of a contractor accountant to help you through this process is advisable, answering all your burning questions on contractor tax.

The basic information you need to include is the following:

• Your income – Details of invoices over the past year
• Bank account interest
• Employment income (P45 + P60)
• Rent/Expenses from property
• Contractor tax you have already paid on income
• NI you have already paid
• Expenses.

Penalties

Don’t lie in this. If you get any of your information wrong or the contractor tax etc. you have already paid you could face a fine up to £3,000 – and the information is held up to nearly 6 years. You are also fined £100 if your tax return is late.