Contractor accountant

Independent contractors and small-scale entrepreneurs put off accounting forgetting cash flow and money have personal and business gains. contractor accountants help in all financial aspects small businesses deal with. Filing returns and ensuring you reduce the tax burden is one of their specialty to ensure you grow your profit margin. It is done legally to avoid expensive legal suits which are an enemy to budding entrepreneurs. If you are running a limited company, contractor tax comes in different forms.

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Limited company contractor Tax


To understand taxation of a limited company better, you need to view the company as an entity on its own. As the owner, you are taken to be a separate entity too. It might seem strange but once this sinks in you will understand the taxes you have to pay better.


a) Corporation tax

Given that limited companies are separate legal entities from the owner, the company will be taxed on the profits made and you will be taxed too(as an individual) on the income you make from the company.

All companies ought to pay corporation tax on the profits made in a year. The tax should be paid within nine months after the completion of a financial year.


b) VAT ( Value added tax)

If your company is registered for VAT, the charges will be applied to services provided. Every invoice you write should take into account this tax. Essentially, you will be the government's tax collector. The tax money should be remitted to HM Revenue and Customs.

You can register for Flat Rate Vat Scheme. However, this money will not be deducted when calculating your gross profits. Nonetheless, you can save a lot of money through this scheme.


c) National Insurance

Every company is required to pay national insurance contributions for the employees. It should be deducted from their salaries. You will have to pay your own national insurance contribution based on the salary you draw from the company.


d) Dividend tax

As a shareholder in the company, the dividends declared by your company will be taxed. The difference between salaried income and dividend income is that the later is not subject to NICs. Thus, company owners get good returns from dividend income.


c) Income Tax

There is a self-assessment process company owners ought to use in settling their income tax liabilities.


How an accountant can save you money on contractor tax


a)Save you from paying more tax than necessary

Knowledge of tax law means an accountant can minimize your tax liability legally. Throughout the year, the accountant will be identifying tax saving opportunities instead of waiting for the financial year to end which is usually too late.


b) Save penalties and fines

Besides paying the right amount, you should submit the required taxation documents within the specified duration. The payment should be made on time too. Failing to meet deadlines attracts penalties and fines which can be expensive. An accountant will remind you when to make payments. Additionally, he or she will come up with an effective budgeting plan to make sure the company has enough money to pay the taxes and keep the company running.


Conclusion

Arguably, the main advantage of getting an accountant as a contractor is that you concentrate on running your company without losing sleep over accounting and tax matters. You can save time, concentrate on winning contractors and meeting your clients' expectations.