How Self-Employed Workers Can Save Money
Being self-employed has many advantages but there are also potential downsides that can arise when working for yourself. One of these is the fact that a regular income is not necessarily guaranteed. Of course, it is solely you who are responsible for your own pay as well as sick leave maintenance, tax payments and pension scheme.
With all these responsibilities to take care of, keeping on top of your finances can be hard and ensuring you have enough to live on a familiar worry. There are ways you can boost your income and save money however; here are some tips to help self-employed workers.
Tax is perhaps the area that provides the biggest leeway when it comes to saving profit. There are perfectly legal ways to reduce your tax outgoings that can be utilised depending on your earnings and legal status.
For example, exceeding £100,000 of income will place you in a more costly tax bracket so try not to earn slightly more than this. Another tip is to claim on your expenses by offsetting the cost of running the business against income. This will reduce any taxable profit you make and thus save more money. Also, make sure you have signed up to make payments to the HMRC by direct debit; this will ensure you don’t miss a deadline and thus have to pay more in the future.
Aside from tax considerations, think of basic saving tips that can be utilised into your business model. Cut down on expenses by acquiring second hand goods from the internet or trying your luck on auction websites. Charity shops are also a potential source of inexpensive equipment that could be as useful as a brand new item; just because something is second hand doesn’t necessarily mean it is inadequate.
Keeping efficient and meticulous records is another way to remain on top of your finances. You will then know where all your expenses are going and which areas you can cut down on if needed. Hold onto paper records of invoices, bank statements and receipts, and maintain a neat filing system so you know where everything is.
Talking to the professionals will help, even if for guidance and not to carry out your bookkeeping or finances. It also wouldn’t hurt utilising somebody like Kaplan Financial and learning a small qualification to keep on top of any tax or accounts issues for your business. The benefit of actually understanding where your money is and having learnt about the different aspects will aid you in the future.
In terms of insurance, although paying for it will cost you in the short-term it does protect you when your earning potential is restricted. For example, a self-employment income protection scheme provides you with a monthly wage in case of an accident or sickness.
When it comes to setting up your own business or becoming self-employed, there are many aspects of the operation that can go wrong. Because of this, it is strongly in your interests to employ someone who is clued about how to stay legally responsible and avoid tax pitfalls. This, along with staying prudent and conservative with your profits, will ensure you save enough money as possible throughout the year.