Working as an Independent Professional can be extremely busy, but it doesn’t have to be busy without due rewards.
Many contractors will be multi-tasking and working against a deadline and as a result, it is easy to lose track of the benefits and advantages that you should take advantage of throughout your contracting journey.
With the Independent Professional market performing so strongly, we have compiled a list of five common oversights that Independent Professionals often encounter.
Whether it is getting paid on-time, utilising tax efficiencies, or planning for the future, we strongly recommend exploring the below topics in more detail.
Submitting Timesheets Where Required:
Different end term clients will have different requirements when submitting an invoice for payment, some will be self-billing which means you have to upload your time worked directly to your client’s platform. Others will require an invoice to be submitted showing the number of hours or days worked.
Many clients will also require a signed timesheet to be submitted alongside the invoice for payment to be processed.
If you are Icon Accounting client, your dedicated account manager will send reminders throughout the month to ensure that this has been actioned before the cut-off date for submission to guarantee that there is no delay to your payment.
The key takeaway is that some clients will only process payroll on specific dates and therefore a missed timesheet can result in a payment being delayed for up-to 30 days, which is something that no one wants to experience.
Top Tip: Download the Icon Accounting App and never miss another timesheet submission!
Claiming Business Expenses:
One of the biggest benefits associated with working as an Independent Professional is the ability to offset business expenses that you incur as part of your contract role.
Whether it is the e-workers allowance, a mobile phone bill, a tax-saver ticket or even the small benefit exemption scheme, every independent professional should be submitting business expenses monthly.
The Icon Accounting App provides our clientele with a seamless and convenient process for claiming their business expenses in line with the Revenue Guidelines. You can watch our YouTube video on the top 10 expenses claimed by Independent Professionals here.
If you are ever in doubt over what can be processed as a business expense, please reach out to your dedicated account manager who will be happy to assist and advise.
Top Tip: Create a list of expenses that you encounter monthly from a professional standpoint and check with your account manager which expenses are considered allowable.
Pension contributions are often referred to as a benefits package from a permanent employment perspective. It is equally ‘beneficial’ and important for an Independent Professional to safeguard their future by making pension contributions.
If you are acting as a director of a company, you can unlock increased tax efficiency through an ‘executive pension’ which provides more tax relief than a standard PRSA pension.
Many Independent Professionals also consider Income Protection as an important aspect to at least consider, and you can read more about Income Protection and the benefits of it in our blog piece here.
Top Tip: At the very minimum, you should explore the option in more detail by consulting with a Wealth Management expert. You can arrange a free financial consultation as part of your Icon Accounting service here.
Submitting the Income Tax Return:
If you are operating through a PAYE umbrella company and don’t have any additional income to declare, you won’t be required to complete an Income Tax Return.
If you are operating through a Director Umbrella Solution or through your own Personal Limited Company, you will be required to complete an Income Tax Return on an annual basis.
If you are an Icon Accounting client, this Income Tax Return is included as part of your fully managed service at no additional cost.
There are numerous benefits to completing your Income Tax Return as soon as the process opens which have been outlined and summarised here.
Top Tip: Submit your return as soon as you can and make it an annual habit!
One of the most common and costly oversights that Independent Professionals experience is their unfamiliarity to Entrepreneurial Relief.
It is worth noting that the relief is only available to Independent Professionals that operate through their own Personal Limited Company, but many of those contractors have been contracting for a period longer than the time required to qualify for the relief, without ever being informed that there was such a high retention rate on offer.
To qualify, you need to be trading through your own Personal Limited Company for a minimum of 3 consecutive years and as a result, you could extract company reserves at an effective rate of tax of 27%, a significant saving when compared against Income Tax and the Dividend option.
You can find out more about Entrepreneurial Relief on our YouTube channel here.
Top Tip: Watch our video on Entrepreneurial Relief and ask for more information if you can see yourself working as an Independent Professional for the next three years!
Working as an Independent Professional can be extremely rewarding and at Icon Accounting, we strive to make life as an Independent Professional as streamlined as physically possible. For further content on maximising your time as an Independent Professional, be sure to subscribe to our YouTube channel for updates and tips as well as our LinkedIn page to stay up-to date with all things contracting!
If you are currently contracting and would like to find out more about Icon Accounting, you can contact a member of our team by completing our contact form or by calling 01-8077106.
If you are an Icon Accounting client and would like to know more, please reach out to your dedicated account manager for more information, or alternatively, download the Icon Accounting App and check out the Knowledge Base for more information on tax efficiencies and business expenses!