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Self-Employed Contractors: Top Tips for Managing Your Business

self-employed

Running a business as a self-employed sole trader can be a real challenge, but there are things you can do to make it easier and give you a better chance of success. In this article we’re sharing some best practice advice from our experts.

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Separate your business finances

Unlike a Limited company director, you are not legally separate from your business so there’s no requirement for you to have a separate business bank account. However, it does make sense to keep your business and personal finances separate if you can.

This can make it easier to budget for business costs, and it can help to keep your personal finances stable when your business income fluctuates. This is particularly useful if your business is seasonal, or if you make most of your income from a few high-paying contracts with downtime in-between.

You can open a free business bank account with Mettle from NatWest, which is specifically designed for small businesses and sole-traders.  

Save for your taxes

Tax is a predictable expense that every business owner should plan for, and having the money allocated and available makes paying your tax bill much less stressful than it might otherwise be. We suggest setting aside a proportion of each invoice in a separate account or saving space within Mettle, so you know you’ll have the money when it’s due. Your accountant will be able to advise on how much you need to set aside to cover your tax liability.

Use accounting software

Accounting software can make running your business much easier. Without a good accounting software package, running a business can see you drowning in paperwork and administration tasks. Manually raising invoices and tracking your expenses can be a full time job in itself, and you have much better things to do with your valuable time.

Most modern accounting software will allow you to scan and upload your receipts, easily raise invoices and track your finances online from any device.

Stay on top of deadlines

If you’re running a business there are a lot of demands on your time, and it’s obviously important to stay on top of things. HMRC’s submission deadlines in particular can cost you money if you miss them, so knowing when they are and completing tasks in good time is an effective way to protect your profits.

Appoint an accountant

A good contractor accountant can go a long way to helping you run your business, freeing up your time so you can concentrate on doing a great job for your clients, as well as saving you money with bespoke tax planning based on your circumstances and goals.

If you work from home

One of the main challenges of working from home is maintaining separation between your work and your private life. This can be particularly difficult when you work for yourself, and being “always on” is a leading cause of stress and burnout among self-employed contractors. If you’re working from home, it can help you to switch off if you:

  • Have a dedicated workspace that you can “arrive at” and “leave” when your workday begins and ends.
  • Make sure your colleagues and clients know your working hours and stick to them.
  • Have a separate phone and email address for your business
  • “Book end” your day by having a coffee or going for a walk when you start and finish.

Goal setting and growing your business

It’s a common adage that you can’t stand still in business – if you’re not moving forward you’re slipping backwards – so it’s important to have a clear idea of where you want to move to. Having a clear goal for what you want to achieve now and over the next few years will help you decide where to put your attention and resources. For example, you might decide to focus on networking and building your personal brand, or maybe you want to learn some new skills so you can aim at a wider range of contracts. You won’t know the best course of action until you decide what you want to achieve.

Consider going Limited

Working as a self-employed sole trader is a great way to start, but as your business grows there will likely come a point when trading through a Limited company will make more sense. Incorporation can provide kudos and respectability in the eyes of your clients, as well as protection for your personal assets and additional tax-planning opportunities.

If you have questions or if we can help in any way, please call our expert team on 01296 468483 or email info@orangegenie.com

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