Top Tips for Contractors on How to Save Money

You’ve put all the hard work in, you’ve secured the freelancer contracts and the pay has been pouring in. What now? Well as nice as it would be to start splashing the cash and splurging on the latest gadgets, as a self-employed person it is important to save some of that hard-earned money.

You work for yourself which means you need to make the effort to ensure you’re getting a steady influx of work. Remember, no matter how reputable you are there will be dry spells of work when employers are not recruiting temporary placements.

The flexibility of being a freelancer is great but it is also tempered with the knowledge that you do need to put some money away for a rainy day because you don’t have a fixed monthly income.

You are not superhuman and you do not have a bulletproof immune system, so there will be times when you get sick. And you are bound to want to jet off on holiday at some point in the year to enjoy the fruits of your labour.

So how can you save money?

•    Set up a Limited company

There are various business structures available to choose from but a limited company is the most tax efficient one. It can save you hundreds of pounds in tax, therefore increasing your take home pay.

•    Claim back your expenses

As a freelancer, there are certain rates and expenses which you can reclaim such as mileage, accommodation and food. Know what you can and cannot claim to save the pennies.

•    Pay your taxes on time

HM Revenue & Customs (HMRC) can fine individuals for any late tax payments or self-assessment forms that are filed past the deadline. Make sure you meet all cut-off dates to avoid a fine.

•    Keep a separate business account

One way you can save money is to have a dedicated business account. Keep all your personal money separate and choose a high interest savings account that offers a good rate of return. Some banks charge you an additional fee for business banking- so try if possible to choose a bank that is more accommodating.

Follow the above top tips to save money in 2013. Who knows, you may need to use the money set aside as an emergency fund for your tax payments or alternatively, the leftover money could be used to update your equipment.

This article was written by, specialists in contractor accountancy. Visit the site today for expert advice on taxes, contractor law and tax efficiency.