For your business to succeed, you must be absolutely committed. Contractors must understand they are running a business and not leave the running of their company to chance.
(PRWeb UK) March 3, 2011
In August 1989 Matthew Durrant started his training as an Accountant. Mrs. Thatcher was still the Prime Minister and everyone under the age of 21 wanted an XR3i or a 205 GTi.
"I remember on the first day having a meeting with a senior Accountant (in my new grey suit) and he explained that, once I was experienced enough – I could begin my training on tax planning for clients. I nodded to confirm my approval and nearly said “Yes Sir”, but stopped short just before I raised my hand in salute. Obviously, I had no idea what he was referring to."
Over the next few years there would be several occasions when this arcane gift was again mentioned. Half expecting some Masonic ritual needed to be performed or a secret handshake returned before he could wear the badge of honour and plan clients' entire future in the world of income tax.
Many years later, Matthew realised there wasn’t going to be an initiation ceremony after all and he could roll those trouser legs back down again. It turned out, planning a clients tax – was not a thing you could actually teach. There wasn’t a secret book with a list of examples or a flow-chart to follow. It could only be performed when you are conversing with an individual – and they are all different. Without exception, all of them have a different personal circumstance and aspiration. For some people it is an expensive car or a big house. For others – it is sending their children to private school or five holidays a year.
Tax planning is a term given to the blanket of advice that helps your business to perform the following :-
1. Retain enough money for all of its debts and liabilities.
2. What are the laws you and your company must not fall foul of?
3. Pay the director and employees the salary they need.
4. Pay the shareholders the dividend the company can afford in conjunction with their personal requirements.
5. Have a look at the costs and expenses the company will need to pay for its daily running.
6. When will the taxes be paid and who has to pay them?
7. Where are the savings you can make?
If you are not or have not considered the above – you haven’t really started a framework for you or your company yet.
Matthew went on further to explain
"One day I may even get the chance to teach Accountancy to smartly dressed juniors at one of the many Accountancy colleges around the UK. If I do, I fully intend to walk up to whiteboard and write “Speak to People”. And then walk off."
Martin Smith, Managing Director at contractoraccountants.com stated :
"Our excessive reliance on compliance and red tape in this country has led to a record number of qualified accountants practising in the UK. But whilst many accountants do a great job, certain parts of our industry are colonised by 'accountants' who lack a basic understanding of the tax system. This is especially significant in the contracting industry where the last decade has seen an increase of Accountants providing services to Freelancers. Such a healthy market is important to the UK economy, but Contractors also need to be aware of the responsibilities they have as a company director."