No matter whom you are or what industry you work in, you’re bound to make a mistake at some point – it’s as certain as the clocks ticking and the leaves falling from the trees. Some of those mistakes, however, are quite common, and can therefore be avoided with some smart forward-thinking.
Starting work without an agreement
Although it seems like common sense, you’d be surprised at how often freelancers and contractors have found themselves in sticky situations because they haven’t drawn up client contracts. If a client decides not to pay you, and you don’t have a signed agreement, it’s almost impossible to get that money from them. Make sure a contract is signed before you start work, and include key information, such as payment dates and termination clauses.
Not being prepared for rainy days
Even if you’re offering a service which every business in the UK needs, it’s more than likely that you’ll experience a quiet period where the work is only just trickling in. This can be because it’s near Christmas, when businesses slow down their spending, or simply because clients can’t afford you. Rather than suffer through these days in poverty, ensure the business has saved enough aside for regular monthly outgoings – including your wages.
Trying to be the accountant too
Being self-employed means a whole world of opportunity has opened up before you – but it also means you’ve got an awful lot of administration and accounting to deal with. Rather than struggle through, making mistakes and burning through hours at a time, hire a reputable accountant or take advantage of cloud-based accounting software to take the load off. If you’re choosing the latter, be sure not to make any mistakes, as HMRC aren’t as forgiving as you might think.
Running out of money
It may seem surprising, but the biggest mistake contractors and freelancers make is running out of money. This isn’t because business isn’t great or their service isn’t viable – rather, their cash flow management is often quite poor. Late payers must be reined in, and spending minimised until the company can afford frivolous purchases. Using online accounting software will help to regulate invoicing and keep an eye on spending, and using a specialist contractor accountant can advise on improving your cash flow.
Now you know the most common mistakes, you can set to work avoiding them. Good luck!
