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As a contractor, you’ll face many challenges, and your ability to overcome them will determine how successful you can be as a self-employed worker. Preparation is key and making sure that you’re in a position to overcome any problems that come your way is paramount.

Challenges can range from issues with clients, to managing your finances. If you are new to contracting, you may not have faced as many issues as those who have been self-employed for years, or you may have already been through the highs and lows of contracting in a short space of time.

Recent stats have shown that more than 7 in 10 (74%) contractors are not happy working via umbrella companies. The research that was carried out by IPSE, a self-employment trade body, showed that despite an increase in the number of contractors working through an umbrella company, many believe there are no advantages to working this way.

A lot of this stems from the IR35 reform that came into force in the private sector in April 2021. With the new legislation in place, a significant rise in freelancers and contractors began operating via umbrellas. More than three in five (61%) of those working this way do not believe it offers any benefits, with the majority (69%) claiming that they had no alternative.

A further two-thirds (63%) of contractors stated that while they had some level of choice, they were given a limited range of umbrella companies to choose from. However, 5% had no say and were allocated an umbrella company to work through.

The main cause for being unhappy was that because of the need to join an umbrella company, they day rates for contractors has fallen. 80% of respondents cited that they now have to cover the liability for employer’s national insurance, and where applicable, the apprenticeship levy, through a reduction in their day rate.

In addition, over half (57%) believed their role should fall outside the scope of IR35, but the supply chain would not allow them to take the risk of working through their own limited company. As a result, around 70 per cent reported having lost their independence.

The report has been shared with the government following their recent call for evidence, in the hope that recommendations will stop freelancers from being forced into working for an umbrella company that limits independence and gives no real benefits.

According to a recent survey, two-thirds of contractors reported being impacted in some way by IR35, with almost a half (46%) describing it as “very negative”.

There is an option of switching between umbrella employment and PSC working. A dual approach means that contractors can work on contracts requiring employment through their umbrella company, while also taking on assignments that fall outside IR35 through their limited company.

Since the rules were introduced, people are starting to feel more confident, however if you’re looking to work in this type of way, it is incredibly important to have a good accountant in place to ensure that your tax payments are being paid correctly.

There is no doubt that the IR35 reform has had a significant impact on the way contractors work and the initial reaction from many businesses caused a huge shift to umbrella employment. But what else can cause a contractor to be unhappy in their work, and how can it be counteracted? We look at some other scenarios:

Having too little or too much work

Contracting comes in all different forms, and in a post-pandemic world, some have been more sought after than others. For example, Brits spent £110 billion on home improvements during the pandemic. As we spent more and more time at home, workspaces needed adapting and the same four walls became tiresome.

Five million people redecorated rooms in their homes, 1.5 million built an outhouse and over a million built home-gyms and extensions. People were saving money on travel, and paid for home improvements instead of holidays. Others simply finally had the time to do it. According to research by Checkatrade, the most common purposes for home renovations over the lockdown period were for shed offices, home cinemas and snugs.

As the property market continues to boom, more and more people are wanting home and garden renovations doing. In short, it’s been a great time for tradesmen, landscapers and builders.

However, a term you may be familiar with is ‘being on the bench’ – what contractors call not being on a contract. It’s incredibly common to go through times where you’re quieter on the work front, especially if you rely on short-term contracts.

If you are facing a quiet period, fill your days with networking events or email marketing, to help build your customer base. Write things down in a diary to keep motivated and show the day hasn’t been wasted.

Just as too little work is a problem, it’s also common for contractors to take on too much. Initially, the prospect of more money is a great incentive, but overworking can see you providing a worse service than normal, and could potentially ruin the reputation you have built.

Contract rates

The rates you charge can vary from client to client depending on the situation, however building a skillset and reputation can ensure you are able to charge a rate in which you deserve. It can also depend on the different industries, and at quieter times you may end up accepting contracts that are worth a little less than you would like.

Making sure you have a great reputation and reviews means you can stand out against a competitive crowd. Ensure you expand on your skills at any given opportunity and compare similar contracts available within that same industry with the aim to negotiate with the client.

Not getting paid on time

Working with a range of clients is great to have a varied work schedule, however you might find that some clients aren’t as timely in their payments. That can cause you problems with your cash flow, which can mean struggling to find funds to pay yourself.

It’s difficult to deal with, however you can take payments or deposits up front to ensure your materials and time is covered for. Being prepared for delayed payments by setting money aside for the possibility of this situation arising can also help you stay afloat.

Managing Taxes & Choosing the Right Accountant

Another common challenge faced by contractors is managing taxes. If you own a limited business or use an intermediary to find work, you could be affected by IR35 tax legislation.

As a contractor, you are unlikely to receive the same benefits as an employee (sick pay, holidays and security), and as a self-employed contractor you can be taxed this mistakenly.

Having a good accountant to keep track of your finances, tax payments and HMRC assessments can make all the difference. Working with the right accountant is vital to being a successful freelancer, contractor or small business owner.

If you already have an existing accountant, they might not be the best fit for your business. If you have been thinking of switching accountants, Gorilla can help. There are lots of reasons why switching accountant may seem like a good idea. These include:

They’re Difficult To Get Hold Of

Contact is key. The minimum that you should expect is to be able to get a response from your accountant quickly and easily. You are, after all, paying for a service. If your accountant is always ringing out to voicemail when you call, or it takes days for them to respond to your email queries, this is a sign that it could be the right time to switch.

You can’t expect your accountant to be on call 24/7, but it’s reasonable to expect them to respond to a query on the same day. This is especially true for ad hoc, time-critical queries. Quick and easy access to the right advice is crucial if you have to make an urgent decision, otherwise it could result in a lost opportunity, and ultimately lost revenue.

Your accountant is a key cog in your business and you should never put up with poor service levels or your business will suffer.

Gorilla’s Client Service Guarantee means you won’t be waiting long for answers to your queries. If you contact us by phone or email on any working day before 3pm, we will respond the same day or we will issue you with a £50 compensation payment.

They’re Too Expensive

Price is a significant factor when thinking about changing your accountant. As a business owner it’s important to keep tight control of your outgoings, especially with the cost of living currently being so high.

The fee you pay is influenced by a range of factors including where the accountant is located, how many years’ experience they have, their specialist areas and whether they are chartered.

Your current accountant might have quoted you a low monthly fee, but then down the line there are hidden fees added for additional services. It’s important therefore to know what services are included in your fees or you might end up paying much more than you should.

Gorilla’s all-inclusive Accountancy Packages are great value starting from just £45 + VAT per month. We pride ourselves on our transparency so you won’t be hit by any hidden fees or nasty surprises.

They Bill You For Every Interaction

Your time is valuable and while you would expect to be charged for an hour-long meeting, your accountant might be too keen to invoice you for every bit of contact you have.

For example, you should be able to give your accountant a quick call without feeling like they are ready to start the timer and invoice you for a 5 minute chat.

The right accountant will be happy to speak to you without adding their time to your bill every single time.

As part of Gorilla’s Client Service Guarantee, you will receive unlimited support and advice from your own dedicated accountant, whether that’s through video call, telephone, email or in person.

They Don’t Understand Your Sector Or Business

You should always make sure that you’re working with an accountant that’s a specialist in your sector. It’s also crucial that your accountant understands your business; the challenges that you face, when your peak periods are or when you might face a cash flow bottleneck.

There’s much more to accounting than just crunching numbers and ensuring compliance. If your accountant doesn’t fully appreciate and understand how your business and sector works, the advice they give you will be generic rather than tailored to you and your specific set of circumstances.

Your accountant should be proactive and identify opportunities for growing your business, as well as threats to it. They should ensure you pay less tax, they should ensure you claim all expenses available to you. And having a good understanding of your sector and business will help them do this more effectively.

Regulations and legislation vary significantly between sectors, and so does the pace of change. It’s key therefore that your accountant has sector-specific knowledge to ensure that you get the best service.

Here at Gorilla, we specialise in accountancy services for Contractors, Freelancers, Sole Traders and Small Businesses. We have extensive sector-specific knowledge and are always up-to-date with the latest tax law updates and Government regulations. We’ve got years of experience of working with self-employed clients and have expert knowledge of IR35 legislation and how it impacts you.

Their Methods Or Technology Are Outdated

Your accountant might be a traditionalist that prefers to work by hand or with spreadsheets rather than the latest bespoke accounting software. It’s imperative, however, that they utilise technology to operate as efficiently as possible or it will cost you time and money. Having an accountant that uses the latest accounting software will make your life much easier and ensure that you are ready for making tax digital.

Using dedicated cloud-based accounting software has many benefits. If your accountant doesn’t provide you with this kind of technology, you are not getting your money’s worth.

Gorilla are a technology-driven firm. We’re forward-thinking and understand how embracing the latest tech makes your life easier. It makes ours easier too! This is why we provide Reagent to all our clients at no extra cost.

FreeAgent is the industry standard cloud-based accounting software specifically developed for contractors, freelancers and small businesses.

It’s fully MTD-compliant and allows you to snap and send invoices, manage your expenses, monitor your cash flow and stay on top of your tax affairs on the go all via the mobile app. Your dedicated accountant will have access to this information via the cloud which increases efficiency.

There’s Been Errors In Your Accounts

Mistakes can happen in all walks of life but if your accountant makes one, or makes them regularly, it can cost you a lot of money in penalties and fees.

It’s crucial that you have trust in your accountant so that you know your finances are in good shape and well taken care of. That way you can fully focus on running your business without the distraction of dealing with, or worrying about, your accounts.

You’re paying your accountant to reduce the risk to your business by ensuring that your financial reporting and compliance is in order and that you pay the right amount of tax so if you have experienced mistakes from them, it’s a sign that you should likely move on.

Here at Gorilla we take great pride in offering the highest levels of service to our clients. Read our outstanding reviews to see why we’re highly recommended as the UK’s leading contractor accountancy firm and the clear choice when it’s time for you to switch.

When Is the Best Time To Change?

You can change to a new accountant at any time of the year and new clients join us every day. Self-employed people often opt to make the switch in April at the end of the tax year, or at a time when there is a lull in their business activity. Many contractors operating as a limited company make the change when the company financial period ends.

Whenever you decide to join us, we can guarantee it will be a smooth transition from your previous accountant.

Switching To Gorilla

You might feel that it’s easier to just continue with your current accountant, or you might think that switching accountants is an onerous process.

We’ve made sure that Switching to Gorilla is a simple and quick process – we do all the legwork so you can focus on your day to day. We will even contact your old accountant for you.

So if you’d like to work with us and have any queries, reach out to a member of our expert team by calling 0330 107 9670 or request a call back at your convenience. They will be happy to discuss your needs and offer any relevant advice including when the best time is to switch.

We can then get you onboard and set up with Gorilla in just 4 easy steps:

Step 1

Fill out our online application form here

Step 2

Give notice to your old accountant to inform them that you are leaving. We can do this on your behalf

Step 3

We’ll then obtain all the required information and accounting records from your old accountant

Step 4

We will set you up on FreeAgent and then you’re ready to enjoy our great service

Refer A Friend

We’re confident that you will love our service and we hope you will tell your colleagues and friends about us. This is why we have introduced our Refer A Friend scheme. We’d like to reward you for your loyalty so if you know someone who would benefit from working with us and has confirmed you can share their details, please complete our Referral Form today.

If your referral joins us and makes 2 months payments by direct debit we will pay you up to £200. There’s no limit on how many referrals you can make so get referring now.

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