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How To Shape Up Your Earnings Model For The New Tax Year
Every freelancer and contractor is out to make as much money as possible; and scrutinising your financial success in previous years can steer you towards higher profits. April is the time of year where one tax season rolls into another, rendering it the perfect month in which to look back over old statements and rethink your earnings model moving forwards.
There are several ways to bring in more money as a freelancer/contractor. In our latest blog, we lay out some of the most effective methods.
Set up a tax savings account
You should already have distinct business and personal accounts that keep your commercial and private income separate from one another. But what about a savings account exclusively for tax?
By channelling 20% of your monthly earnings into a special account via direct debit, you should have no problem paying the taxman come the end of the year. In some instances, you may find you have money left over, which you can either pump back into the business or put towards a holiday.
Regardless, a tax savings account keeps your business financially secure, saves stress at tax submission time and ensures you remain in HMRC’s good graces.
Subscribe to finance software
The better organised your finances are, the less time you’ll waste frowning at spreadsheets and panicking about missing numbers.
That’s why finance software is so beneficial. It doesn’t take long for huge stacks of paper to build up, and standard spreadsheets become head-spinningly confusing after inputting a few months’ worth of figures. The likes of FreeAgent, on the other hand, lets you take charge of your finances. With a speedy, easy-to-use, online system, you can stay on top of finances from anywhere at any time, all year round.
Consider going limited
Do your finances reflect good growth? If so, it could be worth setting up a limited company as part of your new earnings model.
Not only will this reduce your personal liability as a business owner, it’ll also put more money in your pocket. There are lower tax liabilities for limited company directors than sole traders in many instances, so if you’re pulling in bigger profits, it could be time to make the switch.
Adapt your accounts
Rejuvenating your earnings model at the beginning of a new tax year is a smart move, giving you every chance of boosting your business over the course of the next 12 months. However, your accounts need to match your new approach. The best way to make sure everything lines up nicely is by getting an accountant to do it all for you.
Bright Ideas are perfectly placed to offer all the support you could need. Our team of experts can talk through your prospective new earnings model and give you a deeper understanding of your finances, showing you how to keep accounts HMRC-friendly after taking your business to the next level. Get in touch with us today on 0161 669 4221 or info@biaccountancy.com to book a FREE consultation.