2020 was a year packed with surprises, twists and turns. Now that we’ve welcomed in the new year, it’s time to put it all behind us and look ahead to what 2021 will bring. For contractors and freelancers, this time of year is a great opportunity to analyse your business, the successes, the failures, and the goals you want to achieve in the next twelve months.
In this article, we’re looking at ways that self-employed individuals can grow their business and become more efficient – and how we, as contractor accountants, can help you to reach your goals.
Develop Your Soft Skills
Having your own business doesn’t just mean being the best at your job; it also requires you to develop skills like communication, problem-solving, flexibility and organisation. From learning to negotiate new rates to understanding how tax returns work, there’s a lot more that goes into being a contractor or a freelancer than meets the eye.
So, there are many key skills you should consider developing if you haven’t already, as they will help you improve the way you manage and grow your business.
It’s hard to measure soft skills but, in essence, they support the work you do. They allow you to perform at a higher level and to gain and retain clients, so we believe 2021 is the perfect time to develop these skills and increase your chances of success.
Soft skills can be overlooked at times, as they don’t usually come with a certification, but they’re just as important – often, they’re developed through experience, training and interacting with others, so make sure you’re focusing on them this year.
Take Time Off
Many contractors and freelancers struggle with taking a break, especially when they’re at the start of their career. It can be difficult to take time off when you know you have a lot of work and don’t get holiday pay like permanent employees do. It’s still crucial that you invest in your personal life and make time for your family, friends and hobbies, since this will keep you from burning out.
Nonstop work may feel like a necessity when you’re only starting out, but the truth is that it can quickly get out of hand and your performance will suffer. Taking a break will help you feel refreshed and more energised, and you’ll be more creative, confident and productive in your day-to-day work.
So, to improve your wellbeing while ensuring you can deliver consistently good work, take a few breaks throughout the day, a lunch hour and, of course, holidays. Organise your schedule in a way that allows you to take days off work and make sure all your clients pay on time – or that you’re chasing late payments as needed. This will help you to feel less stressed about taking time off.
Get to Grips with IR35
IR35 continues to be an important topic for contractors. Updates to this legislation will come into force this April, after being postponed for a year. The delay was meant to help businesses and individuals deal with the impact of the coronavirus pandemic. From 6 April 2021, not only public sector bodies but also medium and large-sized clients in the private sector will be responsible for determining the contractor’s employment status.
So, you won’t be the only one to determine the right tax and national insurance contributions you’ll have to pay. You will, however, have the opportunity to dispute your status determination if you don’t agree with it by appealing to the client.
This reform is set to add £1.3 billion a year to the Treasury starting in 2023.
Small companies will be exempt from this private sector rollout. A company is a classed as a small company if, during a period of twelve months, their turnover is less than £10.2 million, their balance sheet total is less than £5.1 million and they employ less than 50 employees.
IR35 is a complex matter but, at Gorilla Accounting, we’re here to help. You don’t have to spend your valuable time trying to understand all the ins and outs of this rule, so let us do it for you. Our expert IR35 advice can assist you in figuring out whether you’re inside IR35 or not and if you are, how much tax and national insurance contributions you must pay.
Review Your Rates
The New Year is a great time to review and update your rates. As a general rule, bills and expenses tend to rise in the new year, so why not ensure your rates reflect the more elevated living costs too? Also, as 2020 showed, it’s important to be prepared for the unexpected, and having some money tucked away for a rainy day is increasingly crucial.
Raising your rates can help you to put away savings and to ensure that you’re getting paid what you deserve. After all, if you’re continuously developing your skills and can deliver a growing portfolio for your clients, you should charge appropriately.
Many contractors and freelancers find it tough to ask for higher rates because they fear their clients will leave them or that they’ll have difficulty finding work. However, if your clients know how reliable you are and how well you do your job, they’ll be happy to pay for your services.
Your rates should also take the industry into account, as well as what your competitors are charging, so update them at the start of the year to reflect this.
Network More
Being a freelancer or a contractor can be lonely at times, as you may spend most of your time by yourself. Networking is not just a good way to engage with other professionals and forge new relationships, but also great to help you feel part of a community.
When you’re employed, you have your co-workers to chat to, but things are different when you’re your own boss. So, make it a point to engage with more people this year and start conversations on social media or LinkedIn. This can lead to collaborative projects and new gigs.
Business events are also fantastic for contractors and freelancers. They allow for face-to-face interactions; however, because of current social restrictions, you’ll need to look to online events and professional forums.
Networking can also provide you with feedback and allows you to learn more about what your competitors are doing at any given time. If you didn’t do much networking in 2020, start now.
Do More Things You Like
For most contractors and freelancers, a big reason they became self-employed is to work on the projects they enjoy. So, in the new year, set a goal to accept only the jobs you find interesting or challenging, or gigs that are valuable to you from a contractor’s perspective.
It can even be something that will help you develop as a self-employed individual, as long as you like it.
Of course, we understand the importance of also choosing jobs that help you advance your career – however, make time for fun projects or try something new you’ve never done before but always wanted to.
Plan for Key Deadlines
There are important dates and deadlines to keep in mind when you’re a contractor or sole trader, and you’ll want to make sure you’re prepared for them in advance. For example, you know you have to submit a tax return, so be ready ahead of time – this includes being aware of how much you should pay, since this will allow you to budget better.
Planning for the future will also give you peace of mind. You won’t have to scramble to get everything sorted at the last minute, something that can increase the risk of errors and mistakes. You also don’t have to spend time rushing through your paperwork when you could have been focusing on your day-to-day.
Running a business takes time and effort, so make it easier for yourself by planning everything with time to spare.
Automate Your Accounts
Something that can make your financial planning easier is to automate your accounts. Noting your cashflow by hand or chasing invoices manually is time-consuming and can lead to mistakes, so avoid that by investing in bookkeeping software.
We use FreeAgent accounting software for this so, as a client, you’ll have 24/7 access to this tool no matter where you are (or the device you’re using). You can easily track your expenses and transactions in real time with FreeAgent, automate your invoices, track your incomings, and so much more.
Hire an Accountant
We’ve previously showcased all the benefits of hiring an accountant as a contractor, so consider this a new year resolution. There are many ways in which an accountant can make your life easier, including:
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Helping you to stay compliant with current regulations. As a self-employed individual, being up to date with UK laws is crucial, since this will help you to avoid penalties and fines.
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You’ll get advice tailored to your business, from how to boost your tax efficiency to how to claim expenses. At Gorilla Accounting, we provide you with your very own dedicated accountant who’s always on hand to answer your most pressing questions.
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Talking to HMRC can be daunting, even if it’s to request further information on your taxes, but an accountant can help you through the process.
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You can get many admin tasks out of your mind when you hire an accountant. From payroll to self-assessment submissions, your accountants will handle it all for you.
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Your accountant will keep track of all important deadlines as well, meaning you don’t have to worry about missing a key date or submitting a late document.
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Your returns also need to be submitted correctly. Choosing an accountant with a lot of knowledge of finances and of your industry will ensure that every field and every line is filled in properly, and that there are no errors in your paperwork.
Make Sure You Stay on Track
Most people start off a new year with good intentions but end up not completing their goals. A major part of this is because they set unrealistic goals. So, for 2021, make sure that any goal you set yourself is achievable and realistic. You can dream big and aim high, but make sure to include smaller goals and objectives you know you can achieve.
This way, you won’t be disappointed or frustrated. These goals shouldn’t be set in stone either. Your industry and your business are always evolving, so it stands to reason that your goals will do the same. Review and adjust them as needed so that you can keep up with your short-term and long-term strategies.
Gorilla Accounting can take the stress away from your admin and help you to achieve your goals in 2021. We’ll focus on your accounts while you invest your time in your business, and we’ll help you to become more tax-efficient as well.
Whether you’re looking for sole trader accountants or limited company accountants, contact us today. Just send us your enquiry or call us on 0330 024 0406 and we’ll be happy to discuss your requirements.
