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Accountants for Freelancers in UK

Vidit Agarwal   27 Jul, 2016

Are you a freelancer or thinking about turning into one? Though being a freelancer gives the opportunity to work with many clients and a lot many projects but when it comes to managing the finances, you definitely need a specialist accountant for freelance business to manage the finance and bookkeeping. Don’t panic! DNS Accountants – Top Accountants for Freelancers in UK offer freelance accounting services, together with our award-winning cloud-based technology, to help freelancers manage many elements related to project management including employer tax and the employee’s personal tax filing obligations. Our online accounting software highlights profit, deadlines and tax forecast. Our accountants ensure that the tax obligation is minimized and the freelancers pay tax correctly and on time, as well as offer practical guidance customized to individual circumstances.

Our accountants and tax specialists’ help freelancers with theiraccounts and bookkeeping, and know precisely what it takes to stayontop of the financial matters. Our specialist accountants bring a fresh viewpoint to complex tax obligation issues and help create a clear, transparent approach and make sure the freelancers understand the tax implications. Our monthly accounting package is comprehensive and DNS Accountants don’t charge extra for personal tax return, payroll,IR35 review, company closure or any registered office service.

DNS, an expert accountant for freelancers has come with a special package for Freelancers whereby they would never miss any expenses claim or allowances and will be fully informed of how to maximize claims and reduce taxes. Our prices start from as little as £100+VAT per month.

Advantage of working with Specialist accountants for freelancers

There is a lot of difference in working with specialist accountants for freelancer as compared to a conventional accountancy firm. Usually there are many doubts in the mind of an individual who is turning into a Freelancer and our qualified team of chartered accountants for freelancers and taxation experts can provide answers to the following questions:

  • What is the process and basic requirement for starting a company?
  • Should the freelancing services be carried out through a limited company or a sole trader?
  • How can the tax liability be reduced?
  • Is it possible to claim cost for working from home (WFH)?
  • Which all business costs can be claimed?
  • What will the net take home pay be?
  • Does the business need to register for Value Added Tax (VAT)? What is the flat rate scheme?
  • Computation and recommendation on Value Added Tax (VAT) returns and payments
  • Computation and recommendation on Value Added Tax (VAT) returns and payments

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Accountants for Freelancers

Key Challenges for Freelancers

The modern workforce is far more fragmented. While most people are still engaged in some form of traditional employment, other work arrangements are swiftly gaining in awareness. One of the key challenges for a Freelancer is to opt for the most helpful business model.

The Two Evident Business Model Options for Freelancer are:

  • Sole Trader
  • Limited company

Working as a Sole Trader

According to the UK Government, starting business as a sole trader is the easiest way to start a business in the United Kingdom. For a freelancer, to start working as a sole trader, the requirements are:

  • Inform HM Revenue & Customs (HMRC) about the self-employment status. Make sure that the National Insurance (NI) number is already in place.
  • Register for Self Assessment as a sole trader.
  • Register a business name.

Unless there is any industry-specific license needed, a freelancer is free to start working. There is no need to register with Companies House because although it is a legitimate business, it isn’t a company.

How to Freelance through a Limited Company?

It is very simple and straight forward to run a Limited Company.
  • The first thing is to form a Limited Company – This will take a few minutes and the company should be set up within a couple of hours. For a limited company, the cost of forming is £125 plus (+) VAT. Our team of specialist accountants for freelancers in UK will also help with Value Added Tax (VAT) registration and setting up a bank account for the business.
  • Invoice the clients – A very simple Excel spreadsheet, similar to an expense claim form, to be completed every month.
  • Appoint an Accountant – To notify DNS Associates, a professional accountant for Sole Trader for accounting and tax advisors regarding any correspondence from HM Revenue and Customs or Companies House and we will take care of it.

How can the net take home differ – Limited Company or Umbrella Company?

There is more opportunity for tax planning through a Limited Company but only experienced specialist freelancer accountants can guide the business about this. The most important savings working through a Limited Company over an umbrella are: National Insurance and the Flat Rate Value Added Tax (VAT) Scheme. All Umbrella Companies in the United Kingdom operate as PAYE. This means that tax is paid in the same way as a permanent employee.

National Insurance Saving by Freelance or Sole Trader

  • National Insurance contributions are deducted as a percentage of earnings and this percentage is identical for all companies
  • Under an umbrella company, a freelancer will pay both employees and employers National Insurance (NI)
  • Everyone has a tax code which determines their tax free pay e.g. the standard tax code for 2015/16 was 1060L or £10,600, which means a freelancer can earn £10,600 in a year before they have to start paying income tax.
  • For a contract of say £350 per day a freelancer will pay around £300 a week in NI through an umbrella company whereas with an own Limited Company the freelancer is only liable to pay just £30.

Flat Rate VAT Scheme

The flat rate scheme is an incentive provided by the government to help simplify taxes. The amount of Value Added Tax (VAT) a business pays or claims back from HM Revenue and Customs (HMRC) is usually the difference between the VAT charged by the business to the clients and the VAT the business pays.

Example:

A freelancer bills a client for £1,000, adding 20% VAT to make the total bill amount: £1,200. As an IT consultant, the VAT flat rate charged for the business is 14.5%. Hence, the flat rate payment will be 14.5% of £1,200, or £174.

Advantages of using the Flat Rate Scheme:

  • The ability to earn money from VAT – a freelancer can earn thousands of pounds extra each year simply out of VAT.
  • A reduced amount of paperwork
  • For a new business, using the flat rate scheme is beneficial in the first year as there is an additional 1% decrease on the overall percentage tax paid each quarter.
  • On top of National Insurance (NI) and Value Added Tax (VAT) a freelancer earns interest in the savings plus has access to a broader range of expenses than using an umbrella company.

Few of our valuable freelance clients

  • Digital and associate marketing consultants
  • Digital freelancers and Photographers
  • Film, radio and video producers
  • Graphic designers
  • Management consultants
  • Marketing and PR consultants
  • Project Managers
  • Musicians
  • Translators
  • Web designers and developers
  • Writers
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  • Professional Passport Umbrella
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  • Chartered Institute of Management Accountants
  • Freelancer & Contractor Services Association
  • IPSE