Year-end accounts and record keeping as a freelance creative contractor
‘Cloud solutions such Zero offer accessibility from any location’
‘Keep tidy and organised financial records’
There may have been a time when the standard advice offered by your Accountant might be along the lines of keep a shoe box and put all your bills, receipts etc. in there until year end. We now live in different times though and setting up a filing system in your email box, or a file directory on your laptop to cover expense receipts emailed to you and invoices created, could be far more relevant advice. There are apps too that allow you to take a photo of any relevant expenses and have them captured and entered onto your accounting system of choice but as yet these have seen minimal adaption in the marketplace. Often such software solutions have poor customer service functionality until they reach appropriate scale to justify investment in service and so caution is advised before placing dependence or signing Direct Debit authorities to such SaaS solutions.
Online and cloud solutions such Zero offer the accessibility from any location that an internet connection is available:
- Allowing the user to process transactions and review their books and records from almost anywhere
- The ability to post entries to your books real time, in so far that you have expenses to enter, invoiced transactions to recognise in your sales ledger or bank account statements to post accounting/bookkeeping entries from
- Cloud solutions usually have security advantages over the traditional recording of entries on an excel spreadsheets.
Management Accounting
The long term benefits of accurate and user friendly Management Accounting accounts are often missed by the users of these systems as a result of not accurately setting up charts of accounts at the outset and not giving any thought in what categories of income and expenditure maybe appropriate. Such modules in Accounting packages Zero are easy to use after a little investigation of their function.
There are those though, that despite modern accounts system being more user friendly and intuitive than they have ever been, decide that this is all work best done by someone else freeing up time for tasks that more instinctively match with the freelancer core skillset. If you do decide to hire a Bookkeeper to assist with keeping records up to date monthly their credentials should be checked to ensure that they are registered with an appropriate Accounting or Bookkeeping body as having passed their exams.
Accounting Fees
You may save quite a bit on accounting fees if you are willing to keep tidy and organised financial records and negotiate with you Accountant for the simplicity that this should bring to his or her work. The purpose of keeping Financial Accounts is primarily to fulfil an obligation that exists as a sort of trade off legally for having limited liability status. The Directors of the company need to sign off formally on the Annual Financial statements of the company, with their signature captured to certify that they have been prepared with the requirements of Companies Law requirements.
There are time restrictions within which year accounts must be filed with Companies House after the year end is complete. There are also specific rules regarding when accounts must be filed for the first time after setting up as a contractor. The Government’s portal has improved dramatically in terms of explaining these requirements.
Sole Traders & Partnerships
There are other forms of business form that a Contractor can set up operate as – a Partnership or a Sole Trader does not have to publically file their accounts as Companies House and Company Law requirements do not apply to them. This anonymity can be desired by some business owners. However operating under one of these formats may result in the business owners having higher liabilities in the case of a legal dispute as a result of not having limited liability, and it’s highly recommended that such individuals take out Professional Indemnity Insurance. Not having limited liability allows any creditor who successfully proves a debt against the business being awarded access to the business owner’s personal property. This is not an event that occurs when the owners have limited liability – i.e. operate under a Company name and the protection this offers.
It is still necessary to prepare Annual Accounts though in order to calculate the amount of Income-tax that Sole Traders or Partners have to declare in their own Tax Returns. The time of the preparation of Accounts within a Partnership is often governed by the Partnership Agreement, a type of contract drawn up to agree the responsibilities and rights of the various Partners.
Do you feel that you have a Corporate Identity yet that others could relate to?
Call us now, regarding these services in the London area and how we can help, on 020 8108 0090or complete the enquiry form and we will call you back.