Today is countrywide Freelancers
Day, and with many people pressed into self-employment by the lack of
opportunities elsewhere – about 4 million people are now operational for
themselves – some struggle to chase invoices and pay tax bills while looking
for work. According to website Anchorpeople.com, design, web development and
writing account for most freelance jobs with software development, social media
and conversion the biggest growth areas. But whatever line of business you’re
in, here are six tips to help freelancers stay alive financially. Most
freelancers will be paid gross – before tax – and it’s up to them to make sure
the taxman gets the correct amount of both income tax and classes 2 and 4
national insurance contributions (NI)class 2 NI is a fixed amount each month
while class 4 is a percentage of your profits each year. The golden rule of
freelancing is to make sure you save enough money to pay your tax and NI when
it’s due, and stash it away in a separate, preferably high interest, savings
account every time you get paid. Some freelancers use an accountant to complete
their accounts and submit their self-assessment tax return to HERC.Elaine Clark
of Cheap Accounting says: “Depending on how you set up your business (sole
trader or a limited company) you’ll need to file accounts, tax returns, real
time information on salaries and potentially VAT returns if you exceed the
registration threshold or register voluntarily. Having an accountant on board
will help to avoid costly mistakes and errors in all of these areas.”
