The Benefits of Accountants for Oil and Gas Contractors

The oil and gas industry is a dynamic, challenging and lucrative sector to work in. Oil prices are high which puts the industry on a strong financial footing and with many large multinational corporations in the sector, there’s a wide variety of roles, projects and a wealth of opportunity for oil & gas contractors.

As the world’s population increases, so too does the demand for energy. The oil and gas sector as a whole currently provides over 50% of the global energy supply with close to 12 million employees in the industry overall. That’s not to say the industry is not without its challenges. The gradual and inevitable shift towards sustainability and clean energy and ever more stringent environmental regulations are a threat, and economic and geopolitical issues can cause market volatility.

But in the here and now, it’s a good sector to work in. It can be very financially rewarding with high demand for workers which is great news for contractors as it reduces the chances of having gaps between your contracts meaning earnings will be consistent.

In most cases you’ll be working on-site, whether that’s on an offshore rig or a refinery in the middle-East, with potentially unsociable working hours. A lot of travelling can also be involved with extended periods living in temporary accommodation. For many this is a positive as you get to travel the world as part of your work, but it also presents some challenges such as finding the time to manage your business finances.

What Challenges do Oil & Gas Contractors Face?

Managing Cash Flow

A challenge that all project-based workers face is to manage cash flow and this especially rings true for oil & gas contractors. A fluctuating income is inherent with contract work with irregular payment cycles between contracts, a degree of seasonality, fluctuating expenses and project delays all posing issues. Having a robust and pragmatic cash flow management strategy in place is crucial to ensure that your business is prepared for the unexpected and can meet its financial and tax obligations over time.

Ensuring Tax Compliance

As a self-employed oil & gas contractor you have the responsibility of meeting your tax obligations and ensuring that you’re compliant. Tax regulations and legislation are dynamic and constantly changing and it’s important that you stay ahead of the curve and keep abreast of any changes to avoid any scrutiny and potential penalties from HMRC. It goes without saying that this isn’t easy given the demands of oil & gas contract work.

Bookkeeping and Accounting

It’s essential to develop and maintain good bookkeeping habits to help ensure your accounts are accurate and your tax returns are error-free and timely, but having the time to do this can be an issue. Your bookkeeping responsibilities include retaining documentation relating to income and expenditure in your business including invoices, receipts, bank statements and tax correspondence. Utilising accounting software can be a game changer to streamline your bookkeeping and save lots of time as well as appointing a contractor accountant to handle the rest.

How Accountants for Oil & Gas Contractors can Help

Tax Compliance and Support

Appointing a contractor accountant gives you peace of mind that your overall tax affairs are in order. They will help to ensure that your records are accurate as well as your tax returns. They will also help you to navigate changing regulations regarding tax as well as legislative updates ensuring that you remain compliant with timely and accurate filings.

Increased Take Home Pay

As well as ensuring tax compliance, an accountant plays a crucial role in tax optimisation for oil & gas contractors operating through their own limited company. They will advise you on the most tax-efficient way to extract money from your business with a tax-optimised split of your remuneration through a combination of salary and dividends.

They will also ensure that you maximise your allowable expenses to reduce your taxable profit and lower your Corporation Tax liability, which all contributes to an increase in take home pay.

Effective Cash Flow Management and Financial Planning

An accountant will help oil & gas contractors with overall financial management including cash flow, risk mitigation and strategic financial planning. They will develop and analyse cash flow forecasts, help with budgeting and financial projections which helps to foresee cash flow fluctuations and plan ahead.

Effective cash flow management feeds into risk mitigation as your accountant will help to ensure that your business is on a sound financial footing to enable it to navigate any lean periods between contracts and build the foundations for long term stability and profitability.

Ease The Time Pressure

Oil & gas contractors can be very busy with challenging projects and tight deadlines to meet, as well as a lot of travel eating into their time. An accountant can significantly reduce the administrative burden. They will assist with time-consuming tasks such as preparing, validating and submitting your self-assessment and corporation tax returns as well as managing your pay and the overall financial health of your business.

They will also provide you with accounting software, such as FreeAgent, which has comprehensive automation which includes automatically calculating your taxes, producing financial reports and you can use the mobile app to log expenses on the go to avoid a backlog. Ultimately an accountant will free up more of your time to focus on your work and help you to achieve a better work/life balance.

Gorilla Accounting are expert accountants for oil and gas contractors, as well as many other specialist sectors. When you appoint Gorilla you’ll work with your own dedicated accountant who will be on hand to provide unlimited support, advice and guidance. All your business and personal accounting needs will be expertly managed with a same day response guaranteed on your queries. You also receive full access to award-winning FreeAgent accounting software at no extra cost.

If you have any queries about how our oil & gas contractor accounting service can help you, speak to an accountant today on 0330 024 0406 or request a callback.

 

 

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