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Self Employment? Experts Answer Your Questions

Becoming self employed is not always easy, and sometimes it’s just downright confusing. Many contractors have questions and they demand answers…NOW!

That is why here at Contractor Accountants we have found out the most common questions that our nations self employed have and then sought out the most knowledgable experts to answer them. Over to the experts…

Sole trader or limited company?

One of the most common questions is should you go with sole trader or start a limited company? The director of the IPSE, AKA the Association of Independent Professionals and the Self Employed, he mentioned there are pros and cons to both.

Being a sole trader is more straight forward…there is less paperwork for one. However, forming a limited company offers you more benefits and less risk, especially if you are a contractor at the potential mercy of IR35 or you start to make more cash.

As a general rule, self employed freelancers and contractors find that if they make above £35,000 a year then potentially they could save on tax. Something worth thinking about yes, but make sure you do your own research about if that applies to you.

Should I use an accountant?

The common dilemma facing many of the self employed and business owners around the country is whether or not to hire an accountant? In my opinion most people would benefit from the services of a good accountant who knows what they are doing, but not everybody.

For example, if you have a really small business that is very simple to run then keeping your own books and sending off a tax return at the end of the year should not be too much of a problem.

On the flip side, once your self employment or business starts to become more complicated with more moving parts then if you ask me…an accountant is definitely the way to go.

Not only that, but hiring an accountant that specialises in your area of work can really be a good idea, mainly because they understand the ins and outs of the playing field.

Take a contractor accountant as an example, who works only with contractors and is dedicated to offering the best service possible.

Is clothing a taxable expense?

No self employed professional wants to turn up to meetings or go out with clients while wearing shorts and sandals, it’s important that you dress to impress. So can you actually claim for those expensive suits and shoes? Probably not.

According to one particular tax expert things such as uniforms, safety clothing and laundry costs can be claimed for, but nice clothes from designer shops are generally frowned upon by HMRC when people try to claim for them.

If in doubt, speak with an experienced accountant who can answer any questions you have and also tell you exactly what items are a taxable and which are not.

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