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9 Smarter Ways for Contractors to Manage their Money


Good money management is an essential part of running a business, and this is just as true for contractors as it is for anyone else. Keeping track of your cash flow and making the most of your income are universal concerns. With that in mind, here are our nine top tips to help contractors manage their money.  

CMME’s Guide to Protection for Contractors: Click here to download

Be prepared

As a contractor, you sacrifice some stability and security for freedom and control, and most contractors would tell you it’s a great deal. However, it can leave you vulnerable in some areas, and contingency planning is a way to combat that vulnerability.

Ask yourself how you’d manage if you had an unexpected gap between contracts, if you couldn’t work due to illness or injury, if your client paid a month late, if you had legal fees to pay etc. Take appropriate steps to make sure you could manage, based on a reasonable assessment of the risk and the cost. For example, a gap between contracts is a common occurrence for many contractors, so it makes sense to have a contingency plan for when it happens.  

Often, your contingency will involve setting money aside or buying insurance to cover you if something happens, but there are other things you can do as well. For example, you might want to arrange a substitute in advance, so you don’t lose clients if you have a period when you can’t work.

Make your money go further

Spending less is another obvious way to improve your money management, and most people can find ways to cut their expenses if they really think about it. Depending on your circumstances, regularly revisiting your utility providers, shopping around for your phone contract or using a fuel-efficient car could make a real difference.

Orange Genie Accountancy clients have a real advantage here, because they have access to our Discount Outlet, which is an enormous collection of discounts and cash-back offers that could save you money on just about everything. It really is huge, and it’s constantly updated, so once you’re in the habit of searching it before making a purchase you’ll be surprised at how much you can save, and how easy it is to use.

Save for the future

Much as you may enjoy your job and the contracting lifestyle, few people want to work forever and contractors are responsible for their own pension provision. The earlier you start investing in a pension, the easier it will be to provide the income you need to fund your retirement, so if you haven’t already started, the time to start is now.

Pensions are an extremely tax efficient way to save, so your tax planning strategy could well include the provision of a pension. Once again, we’d advise you to speak to a contractor specialist like Contractor Wealth for specific pension advice.

Get specialist investment advice

Investing money takes careful consideration, and it’s important that you get the right advice, so you can make informed choices and you’re sure of the risks involved. Just as with your accountant, it’s best to seek advice from a specialist who understands contractors and the particular pressures and concerns they have. Orange Genie’s trusted partner Contractor Wealth have a great deal of experience and expertise in this area.

Make sure you get the best mortgage deal

A contract’s profile can make high-street mortgage lenders nervous, because they don’t understand how contractors work. Your series of temporary engagements can look unstable to them, and they can see lending to you as a risk. As a result, assuming they offer you a mortgage at all, the deal you get from them is unlikely to be very good.

The reality is that contractors, with their higher earning power and flexibility, are generally a less risky proposition than traditional employees, so the challenge is to find a lender who understands that. Using a specialist mortgage broker like CMME is one way to achieve this, as they have access to underwriters who understand contractors, and have negotiated specialist terms. Through a specialist broker, you’ll have access to the same range of deals an employee would get, based on your annualised contract rate.

Use web-based accounting software designed for contractors

The financial life of a contractor can be complex. There are invoices to raise, payments to chase and taxes to pay. Keeping track of it all manually can be difficult and time-consuming, and it’s almost inevitable that you’ll miss an important detail or lose track of a payment at some point. Using good quality web-based accounting software can change everything, simplifying and automating tasks so your contracting business runs smoothly, rather than getting lost in a blizzard of paperwork.

If you’re lucky enough to be with Orange Genie Accountancy, you’ll have access to FreeAgent’s award winning accounting software, which allows you to stay on top of your finances from anywhere, on any device. 

Engage a contractor accountant

One of the most important things you can do to make sense of the financial jungle is to engage a specialist contractor accountant. This is particularly true if you’re trading through a Limited company, but any self-employed contractor will benefit from good quality advice. Use a contractor specialist rather than a high-street accountant, as they’ll have a better understanding of the issues affecting contractors like you.  

Maximise your income/minimise your tax

You don’t need us to tell you that you’ll have more money if you pay less tax, but the question is how? It’s important that you operate compliantly, after all, no-one wants to see the wrong side of an HMRC investigation, and saving tax now just to get a bill and penalties later is not a great idea.

For contractors trading outside IR35 through a Limited company, the main way is to optimise your salary/dividend strategy. Your accountant will be able to advise you, based on your particular situation. You can also make sure you’re claiming all allowable expenses, offsetting any charitable donations and making full use of any other relevant tax planning opportunities. This is another reason why it’s important to engage a specialist accountant who understands your business and circumstances.

Face financial problems

If you’re experiencing financial problems, whatever the reason might be, it’s important that you take action as early as possible. For many it takes a genuine crisis before they start to take control of the situation, and that means the problem is larger, and the consequences more serious than they needed to be. The important thing to realise is that, however large and urgent your debts are, there is always a solution, and the first step is to seek advice.

If you’re with Orange Genie Accountancy, our Support and Counselling service includes specialist debt counselling for those who need it. The service is available at any time, day or night, it comes at no cost to you, it’s entirely confidential and there are no usage limits.

If you have any questions or if we can help in any way, please contact our expert team on 01296 468 483 or email info@orangegenie.com

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